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THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


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THE  ELEMENTS  OF  THE  LAW 


OF 


NEGOTIABLE  mSTRUMEFrS, 


joh:n'  ^^\  dais^iel, 

OF  THE   LYNCHBURG   (VA.)    BAR,   AND 
AUTHOR  OF  "DANIEL   ON  NKGOTIABLE   INSTRUMENTS. 


OHAS.    A.    DOUGLASS, 

OF  THE   BAR  OF  THE  DISTRICT  OF  COLUMBIA,  AND 

PROFESSOR  OF  THE  LAW  OF  NEGOTIABLE  INSTRUMENTS  IN 

GEORGETOWN    UNIVERSITY,   OF  WASHINGTON,  D.  C. 


NEW  YORK: 

BAKER,  VOORHIS  &  COMPANY, 
1903. 


Copyright,  1903, 
By  baker,  VOORHIS  &  COMPANY. 


T 


i)  ^?4-(, 


J.  B.  LYON    COMPANY 

PRINTERS     AND     BINDERS 

ALBANY,     N.     Y. 


TO 


JOSEPH  J.  DARLINGTON,  LL.  D., 

OF  THE   BAR  OF  THE   DISTRICT   OF  COLUMBIA, 

PROFESSOR,  AUTHOR,  AND  LAWYER,  WHOSE  GREAT  ABILITY  AND  EXALTED  CHARAC- 
TER HAVE  GIVEN  ADDED  SPLENDOR  TO  THE  PROFESSION  OF  THE  LAW, 
AND  WHOSE  GENEROUS  AID  TO  STRUGGLING  YOUNG  LAWYERS 
HAS  MADE  IIIM  AN  INSPIRATION, 

THIS  WORK 

IS,    WITH    HIS    PERMISSION, 

RESPECTFULLY  INSCRIBED 


BY    THE    AUTHORS. 


;'29'i09 


PREFACE. 


The  work  which  follows  is  designed  exclusively  for  the 
use  of  students  and  instructors  in  law  schools,  and  it  has, 
therefore,  been  styled  "  The  Elements  of  the  Law  of  Nego- 
tiable Instnjnients." 

It  is  based  upon  the  treatise  known  as  "  Daniel  on  Nego- 
tiable Instruments,"  and  upon  the  lectures  of  Mi\  Douglass 
on  that  subject  in  the  Law  Department  of  Georgeto\\'n  (D.  C.) 
University.  To  the  student  should  be  vouchsafed  the  sub- 
stantial benefits,  on  the  one  hand,  of  the  point  of  view  and 
professional  experience  of  the  lawyer-author,  and  on  the 
other,  of  the  lectvirer's  practical  appreciiation  of  the  usual 
difficulties  attendant  upon  the  study  of  the  law.  These  were 
the  considerations  in  mind  in  determining  upon  the  com- 
bined sources  of  information  and  material  for  a  student's 
text-book  on  this  imjKtrtant  subject. 

Wherever  it  has  been  practicable,  free  use  has  been  made 
of  the  text  of  "  Daniel  on  Negotiable  Instruments,"  includ- 
ing both  language  and  arrangement,  but  pains  have  been, 
taken  to  regulate  and  apportion  the  space  devoted  to  the 
many  sub-subjects,  as  their  relative  importance,  from  the 
standpoint  of  the  student,  requires.  In  addition,  the  sub- 
ject-matter has  been  rearranged  and  transposed  and  new  mat- 
ter added ;  in  fine,  everything  has  been  done  that  seemed  to 
the  authors  necessary  to  make  the  subject  both  intelligible 
and  attractive.  The  volume  contains  no  notes  except  the  bare 
citation  of  the  cases,  and  they  have  been  principally  confined 
to,  and  carefully  selected  from,  well-considered  eases  cited 
in  "  Daniel  on  Negotiable  Instruments."  \Miile  it  is  a 
radical  departure  from  jirevailing  methods,  it  has  been 
esteemed  wise  to  omit  in  the  notes  themselves  all  comments 
upon,  and  reference  to,  the  scope  and  effect  of  the  decisions, 

[vl 


VI  I'KEIACE. 

whether  ill  hannony,  or  in  conflict,  with  the  text,  preferring 
to  include  in  the  body  of  the  work,  itself  all  that  is  thought 
necessary  for  the  student's  use.  The  experience,  both  of 
teacher  and  pu})!!,  amply  establishes  the  fact  that  comments 
and  statements  in  the  notes,  esjiecially  when  in  conflict  with, 
or  in  modiflcation  of,  the  law  as  announced  in  the  text,  are 
well-springs  of  confusion,  doubt,  and  difficulty  to  the  student, 
lioweyer  faithfully  and  diligently  he  may  seek  to  master  the 
subject  in  hand. 

Tlie  ''  Xew  jSTegotiable  Instruments  Law,"  first  enacted  by 
the  Legislature  of  New  York  on  May  19,  1897,  has  become 
law  in  nineteen  States,  and  also  in  the  Territory  of  Arizona 
and  the  District  of  Columbia,  and  it  is  destined  in  the  near 
future  to  Ix^  the  unifomi  law  throughout  the  United  States. 
The  full  text  of  this  important  statute  will  be  found  in  an 
appendix  to  this  work. 

We  are  indebted  to  Mr.  E.  B.  Sherrill,  of  the  Bar  of  the 
District  of  Columbia,  for  the  carefully  ]n'epared  index  and 
table  of  cases,  and  also  for  yaluable  assistance  giyen  in  the 
preparation  of  the  text. 

JNO.  W.  DAIsTIEL. 
CHAS.  A.  DOUGLASS. 

Washingtox,  D.  C,  December  1,  1902. 


TAl^LE  OF  CONTENTS. 


BOOK  I. 

THE  MAKING  OF  THE  INSTRUMENT. 


CHAPTER  I. 

Pa  pp. 

Nature,  History,  and  Uses  of  Negotiable  Ixstruments 1 

Section  I.     Nature,  origin,  and   history  of  bills  and  notes 1 

II.     Foreign  and  inland  bills   5 

III.     The  effect  of  a  bill  of  exchange  —  when  it  is  an  assign- 
ment, and  when  not    ' 

CHAPTER  II. 

Different  Kinds  of  Negotiable  Instruments  11 

Section  I.     Definitions  of  bills  of  exchange  and  promissory  notes, 

and   the  differences  between    them    11 

II.     Coupon    bonds    1- 

III.  IV.nk   notes    l-'> 

IV.  Certificates  of  deposit  !•> 

V.     Cheeks    1' 

VI.     Bills  of  credit   25 

VII.     Quasi-negotiable   instruments    26 

CHAPTER   III. 

Formal  Reqcisitks  or  Negotiahle  IxsTRrMENXs 34 

Section  I.     Difference  in  structure  between  bills  of  exchange  and 

promissory   notes    34 

II.     Formality  in  respect  to  style  and  material 34 

•       III.     The  several  parts  of  a  foreign  bill  called  a  set 3!) 

IV.     Stamps  upon  negotiable  instruments 40 

V.     Delivery    42 

CHAPTER  IV. 

Essential  Requisites   of  Negotiakle   Instriments 44 

Section  I.     The  paper  must  be  open  —  that  is.  unsealed 44 

II.     Certainty  as  to  engagement  to  pay 45 

III.     Certainty  as  to   fact  of  payment 4t> 

IV.     Certainty  as  to  amount  to  be  paid 51 

V.     Certainty  as  to  the  medium  of  payment,  which  must  be 

only  in  money    ^^ 

Iviil 


vlii  TABLE    OF    CONTENTS. 

CHAPTER  V. 

Pago; 

Consideration  of  Negotiable  Instruments 56 

Section  I.     Consideratioti  presumed 56 

II.     Good  and  valuable  considerations 57 

III.     What  are  illegal  consideiations   62 

IV.     By  what  law  legality  of  consideration  is  determined.  .  65 

V.     Partial  want,  failure,  or  illegality  of  consideration.  ...  60 

VI.     Between  what  parties  the  consideration  is  open  to  in- 


quiry 


09 


VII.     How  illegality  may    be    purged  —  renewal    of    instru- 
ment    '. 71 


BOOK  11. 

PARTIES  TO  THE  INSTRUMENT. 


CHAPTER  VI. 

Persons  Qxtalified  73 

Section  I.     Fiduciaries  as  parties  73 

II.     Agents  as  parties 75 

III.     Partners  as  parties   83 

IV.     Corporations   as  parties    88 

CHAPTER  VII. 

Persons  Partially  or  Wholly  Disqualified 94 

Section  1.     Infants 94 

II.     Lunatics,  imbeciles  and  drunkards 98 

III.     Alien  enemies 101 

IV.     Married  women    103 


BOOK  III 

THE  NEGOTIATION  OF  THE  INSTRUMENT. 


CHAPTER  VIII. 

Transfer  by  Delivery  and  Indorsement 106 

Section  I.     Nature  of,  and  liabilities  created  by,  contract  of  in- 
dorsement      107 

II.     Form  and  varieties  of  indorsement Ill 


TABLE    Ol"    CONTENTS.  IX 

CHAPTER   IX. 

I'UKC- 

Natuke  a.vd  Eights  of  a  Bona  Fide  Holder 122 

Section  I.     The  rights  of  a  bona  fide  liolder 122 

11.     Kxci'ptiuns  to,  and  iiiodilicalions  of,  the  rule  as  to  the 

rights  of  a    bona  fide   holder 1^57 

III.     What  constitutes  a  botia  fide  holder U2 


BOOK  IV. 

FIXING  LIABILITY  TO  PAY  THE  INSTRUMENT. 


CHAPTER  X. 

Pbesentment  for  Acceptance,  and  Acceptance 162 

Section  I.     What  bills  of  exchange  sliould  be  prespBted  for  accept- 
ance     16- 

II.     By  and  to  whom  presentment  should  be  made 105 

III.     The    place    where,    and    how,    presentment    should    be 

made 16" 

IV.     Time  of  presentment  for  acceptance 16^ 

V.     The  nature  and  eflfect  of  acceptance 1"2 

VI.     By  wliom,  and  when,  bills  should  be  accepted 178 

VII.     Form   and   varieties   of   acceptance 188 

CHAPTER  XI. 
Presentment  for  Payment  1^9 

Section  I.  By  and  to  whom  the  instrument  should  be  presented .  .   200 

II.  Time  of  presentment    20;! 

III.  Place  of  presentment    210 

IV.  Mode  of  presentment    219 

CHAPTER  XII. 
Protest  and  Notice  of  Dishonor 225 

Section  I.     Protest 22.) 

II.     Notice  of  dishonor    234 

CHAPTER  XIII. 

Circumstances  of  a  General  or  Special  Nature  Which  Excuse 

Want  of  Presentment,  Protest,  or  Notice  of  Dishonor  ....  254 

Section  I.     Circumstances  of  a  general  nature  which  excuse  want 

of  presentment,  protest,  or  notice  of  dishonor 254 

II.  Circumstances  of  a  special  nature  which  either  excuse 
want  of,  or  show  absence  of  a  right  to  require,  pre- 
sentment, protest,  or  notice  of  dishonor    257 


TABLE    OF    COXTKXTS. 

BOOK  V. 

ACTIONS  AND  DEFENSES. 


CHAPTER   XIV. 

Page. 

Actions 268 

Section  I.     Who  may  sue   2G8 

IT.     Wlio  may  be  sued    275 

III.     When  rio-ht  of  action  accrues 277 

TV.     When  liglit  of  action  expires   280 

CHAPTER  XV. 

Defenses 282 

Section  I.     Tlie  defendant  did  not  make  the  instrument 283 

II.     The  contract  sued  upon  is  in  law  nonenforceable 303 

III.     The  plaintiff  is  not  entitled  to  sue 305 

IV.     The  obligation  created  has  been  discharged 306 

V.     Statute  of  limitations    328 

CHAPTER  XVI. 

Conflict  of  Laws   330 

Section  I.     IjCx  loci  contractus   332 

II.     Lex  fori 339 


TABLE  OF  CASES  CITED. 


[The    references   are    to   paragraphs    marked    §.] 


Abel  r.  Sutton,  141. 
Adair  i\  Lenox,  455. 
Adams   r.    ilackensack   Co.,   464. 

V.  Leland,  .SOT. 

v.  Otterback,  ;}28. 

V.  Reeves,  452. 

r.  ^Yilson,  60. 

r.  Wordlev.  310. 

i\  Wright^,  378. 
Administrators  of   13eaman    v.   Rus 

sell,   443. 
Agnel   r.  Ellis,  277. 
Agnew  ('.  Aldeii,  108. 

i>.  Bank  of  Gettysburg,   259. 
Agricultural    Hank   r.  Burr,  4o. 
Alderson  r.   Langdale.  441. 
Alleman  r.  Wlieeler,  423. 
Allen   r.  Bratton.  49/. 

r.  Frazee,  214. 

r.  Hearn.   102. 

V.  Merchants"  Bank,  132. 

r.  Newburv,  405. 

r.  O'Donald,  478. 

V.  Pegrani,    45. 

r.  Suvdani.   257,  268. 

v.  Tate.  309. 
Alston  r.   Hartman,  402. 
Amherst  Academy  r.  Cowles,  405. 
Ammidown  r.  Woodman,  330. 
Amner  r.  Clark,  7. 
Anderson  r.  Bullock,  73. 

r.  De  Soer,  12. 

r.  Drake,  264.  397. 

V.  Hick,  300.  306. 

r.  Warne.  477. 
Andover  Bank  r.  Grafton,  222. 
Andover    Savings    Bank    v.   Adams, 

401. 
Andressen   r.  First  Nat.  Bank,  299. 
Andrews   r.  Franklin,  78. 

r.  Pond.    245.    486,    490. 
Androscoggin  Bank   r.  Kimball,  62. 
Anucl  r.  McClellan.  151. 
Angle  r.  Ins.  Co..  245,  251,  427,  432, 

441. 

[ 


Anketel   V.  Converse,  459. 
Annville    Nat.    Bank    v.    Kettering, 

389. 
Ansel  c.  Olson,  333. 
Appleby  r.  Beddolph,  77. 
Applegarth   r.   Abbott,  355. 

l\  Robinson,   108. 
Arents  v.  Commonwealth,  195. 
Armeiidiaz  v.   Sana,   486. 
Armitt  V.  Breame,  62. 
Armstrong,  In  re,  297. 
Armstrong    v.   Am.    Kx.    Bank.   7. 

r.  Chadwick.    389. 

r.  Toler.  485. 
Arnold  r.  Dresser,  319. 

L\  Jones,   437. 

r.  Kinloeh.  354. 

V.  Potter,   491. 

f.  Sprague,  128. 

V.  Stack  pole.    128. 
Arnot  r.  Erie  Railway  Co..  145. 
Ashurst   r.  Royal   Bank.  203. 
Aspiiiwall  r.  Wake,  275. 
Atkins  r.  Owen,  467. 
Atkinson  r.  Hawden.  441. 
Atlanta  Nat.  Bank  v.  Douglass,  478. 
Attornev-General       r.      Continental 

Life    Ins.   Co.,    14. 
Attwood   r.   ^Nlunnings,   283. 

c.  Weedcn.  102. 
Atwood   r.  Crowdie.  98. 
Auerbach   r.   Pritchett,  86. 
Averett's  Admr.   v.    Booker,   91.   92. 
Avmar  r.  Beers,  395. 

r.  Sheldon.  500. 

Bachellor    r.    i'riest.   268.   312,   314, 

450.  454. 
Backus  v.   Shepherd.  389. 
Bailey  r.  Dozier.  347. 

V.  Rawlev.   124. 

V.  Tavlor.  443. 
Bain  r.  Whitehaven,  etc..  R.  R.  Co., 

496. 
Baker  r.  Stackpole,  460. 
xi] 


Xll 


TABLE    OF    CASES. 


[References  are  to 
paragraphs  marked  §.] 


Baldwin  r.  Farnsworth,  336. 
Halkiid  r.     ins.  Co.,  430. 
Ballingalls  r.  Gloster,  174,  413. 
Jkilnie  c.  Wanibangh,   131. 
Banbnrv  r.  Lissett,  30S. 
Bank  v.  C'ason,  248. 

r.  Mallan.  400. 

V.  Pittell,  38. 
Bank  of   Alexandria   r.    Swan,   362, 

378. 
Bank  of  Amerita  r.  Indiana  Bank- 
ing Co.,  40. 
Bank  of   British  North  America  v. 

Ellis.  93,  171. 
Bank  of  Columbia  r.  Lawrence,  373, 
375. 

r.  Pattersons  Admr.,    146. 
Bank  of  Commerce  v.  Bogy,  11. 

L\  Union  Bank,  280,  431. 
Bank    of   Commonwealth    f.    Curry, 
285. 

V.  Mudgett.  335,  357. 
Bank  of  England  r.  Newman,  316. 
Bank   of   Fayetteville    v.   Lutterloh, 

337. 
Bank    of    Fort    Madison    V.    Alden. 

134,  138. 
Bank  of  Genesee   i\  Patchin    Bank, 

437. 
Bank    of    Geneva   v.    Howlett,    372, 

376. 
Bank  of  Hamburg  v.  Flynn,  252. 
Bank  of  Ireland  v.  Archer,  303. 
Bank  of  Kansas  City  v.  Mills.  314. 
Bank  of  Kentucky  v.  Pursley,  348. 
Bank  of  Louisvifle  ;■.  Ellery,  286. 
Bank  of  Metropolis  v.  New  England 

Bank,  98. 
Bank  of  Missouri  v.  Vaughn,  366. 
]}ank  of  Mobile  v.  Brunn,  32. 
Bank  of  Ohio  Valley   v.  Lockwood, 

430,  438. 
Bank  of  Old  Dominion  V.  McVeigh, 

360,   301. 
Bank  of  Republic  V.  Millard,  40. 
Bank  of  Sandusky  V.  Scoville,   100. 
Bank  of  Troy  r.  Topping,  118. 
Bank  of  United    States  v.   Bank  of 
Georgia.  451. 

V.  Bierne,   369. 

V.  Carneal,  364,  375,  379. 

r.  Dandridge,  146. 

V.  Donallv.  403,  496. 

r.  Goddard.  365.  366. 

V.  Hatch,  475,   476. 

V.  Norwood.  373. 

V.  United  States,  314,  454,  492. 


Bank  of  Utica  r.     Smith,  259,  312, 
314,   342,   454. 

V.  Wager,   326. 
Bank  of  Vergennes  V.  Cameron,  339, 

353,  356. 
Bank    of    Wasliington    v.    Triplett, 

257,  258,  326,  500. 
Barber  v.  Gingell,   125. 
Barclay  V.  Bailey,  323. 
Baring  v.  Clark,  293. 
Barker  v.  Barker,  94. 

V.  Hall.  373. 
Barnes  v.  Gorjnan,  89. 

V.  McMullins,  474. 

V.  Reynolds,  371. 
Barnet  v.   Smith,   38,  298. 
Barnett   v.   Offerman,    110. 
]5arr  i\  Boyer,  478. 
Barrett  v.  Barrett,  494. 
Barring  v.  Clark,  453. 
Barry  v.  Clark,  294. 

V.  Morse,  389. 
Bartlett  v.  Benson,  203, 

t".  Robinson,   376. 
Bass  V.  Clive,  275. 
Bassenhorst  v.  Wilby,  325. 
Bassett  v.  Avery,  201. 

V.  Haines,  298. 
Batchelder  v.  White,  431. 
Bathe  v.  Taylor,  429. 
Baumgarden  r.  Reeves,  393. 
Bausmann  r.  Kelley,  313. 
Baxter  r.  Earl  of  Portsmouth,  160. 

V.  Little,   204. 

V.  Stewart,  89. 
Bay  V.  Frazer,  57. 
r,avlev's  Admr.   r.  Chubb,  276. 
Bealls  V.  Peck,  371. 
Bean  v.  Briggs,  499. 
Beckerdike  v.  Bollman,  387. 
Beckwith  r.  Smith,  377. 
Beeching  v.  Glower,  338. 
Beeler  v.  Frost,  389. 
Beeman  v.  Duck,  278,  422. 
Beenel   v.    Tourmillon,   376. 
Begbi  V.  Levi,  288. 
Belknap  v.  Nat.   Bank,  420. 
Bell   t\  First  Nat.   Bank,   257,   326, 
332. 

v.  Hageistown  Bank,  374,  376. 

V.  Morrison,   481. 
V.  Norwood,  409. 
Bellamy  v.  Majoribanks,   33. 
Bellasis  V.  Hester,  287. 
Bellows   V.  Lovell,   478. 
Bender  r.  Been,  468. 
Bcnham   v.  Bishop,   155. 


[Rrfrrmccs  arc  to 
i)(iiu(jrciph{>  marked  §.J 


TAIiLE    OF    CASES. 


xm 


Benjamin  v.  McConnell,  469: 
Bennell  v.  Wilder,  459.  ' 

Best  V.  Crall,  234. 
Bettis  V.  Bristol,  \11. 
Beverly's  Case,   157. 
Bigelow  r.  Benedict,   102. 

V.  Colton,   190. 

c.  Heninger,    255. 

r.  Stephens,  431. 
Biggs  V.  Piper,  02. 
Billgerry  c.  Branch,  29,  1G4,  384. 
Billing  V.  Devaux,  299,  302. 
Billings   V.   Collins.   238. 
Binney  v.  Plumley,  70. 
Bird  V.  Daggett,  145. 

V.  Le  Blanc,  389. 
Bissell   V.  Adams,  481. 

V.  Jeffersonville,    129. 
Black  r.  Ward,  88. 

r.  Zacharie,  47. 
Blackman  v.  Green,  1G8. 

V.  Lehman,   77. 
Blackstone   Bank   r.   Hill,  459, 
Blair    r.    Bank    of    Tennessee,    437, 
475. 

V.  Carpenter,  459. 
Blair   &   Hoge  r.    Wilson,    28,    384, 

385 
Blake  v.  McMillen,  319. 
Blakely  v.  Grant,  372. 
Blakey  r.  Johnson,  439. 
Blanc  r.  Mutual  Nat.   Bank,   132. 
liliss  r.  Houghton,  498. 
Boalt  V.  Brown,  431. 
Bobe   V.   Stickney,   459. 
Boehm  v,  Garcias,  306. 
]iogarth  ('.  Breedlove,  432. 
Bogert  r.  Hertell.  119. 
Bolton  r.  Dugdale,  82. 
Bond  r.  Farnham.  39G. 
Bonman  r.  Van  Kuren,  248. 
Booe    r.   ]Mix,   154. 
Booth    r.  Powers,  436,  440,  441. 
Borden  r.  Clark,  186. 
Borough  V.  Perkins,  347. 
Hosanquot    v.    Dudnian,   98. 
Bosch    r.   Gassing,   244. 
Boss  r.  Hewitt,  243. 
Boucholl  r.  Clary,  151. 
Bouuhnor  r.  IMayer.  102. 
Bowen  r.  Newell,  30.  34. 
I'owerbank  r.  Monteiro.  59,  310. 
Bowie  r.  Duvall.  314.  405. 
Bnwkor   r.  Childs,  468. 
Bowman  r.  Hiller,  177. 

r.  McChesnev.  321. 


Bowman  v.  Wood,  398,  403. 
Bowyer  v.  Bampton,  176. 
Boyce  v.   Edwards,  304. 

V.  Geyer,  253. 

V.  Tabb,  1U5,  106. 
Boyd  V.  Cleveland,  389. 

r.  .Jolinson,   118. 

V.  McCann,   111. 

r.  Nusniilh,  36. 

V.  Plumb,   138. 

r.   N'anderkami).  255. 
Boyd's   Admrs.    r.   City   Sav.   Bank, 

318,  360,  371,  374. 
Bracton  v.  Willing,  272. 
Bradlee  l".  Boston  Glass  Co.,   126. 
Bradley  r.  Ballard,  148. 

■V.  Northern     Bank,     316,     348, 
357. 
Brage  r.  Netter,  469. 
Braham  r.  Bubb.  77. 
Brailesford   v.  Williams,  365. 
Hraitliwaite   v.  Gardner,  275. 
liraley   /'.   Buchanan.   370. 
liranch  State  Hank  v.  McLeran,  319. 
Bray  r.  Iladwen.   380. 
Brennan  r.  Merchants'  Bank,  454. 
Brent's  Exrs.  v.  Bank  of  Metropolis, 

333. 
Bresenthal  v.  Williams,  75. 
Brewster   r.   Sime.  51. 

r.  Williams,  80. 
Bridgeport   Bank  r.  Dyer,  268. 
Bridges   r.    Berry.   359. 
Briggs  r.  Boyd.  249. 

r.  Cent. 'Nat.  Bank,  132. 

V.  Merrill.  2:^8. 
Brigham   r.  Potter,   109. 
Brill  V.  Tuttle.  14. 
Briscoe  r.  Bank  of  Kentucky,  42. 
Bristol  r.  Warner,  78. 
Britain  r.  Dierker.  429. 

r.  Nichols,  337. 
British    Linen    Co.     r.    Drummond, 

495. 
Bromwick    V.  Lloyd,  5. 
Brooks  r.  Hanover  Nat.  Bank,  55. 

r.  Mitchell.  .324. 
Broughton  r.  M.  &  S.  Water  Works, 

143. 
Hrown.  In  re.  29. 
Brown  r.  Baker.  127. 

r.  Bank  of  Abington,   373. 

V.  Barry.  346. 

r.  Butchers,    elc.    Bank,    58. 

V.  Callowav.   236. 

r.  Chancellor.   327. 


XIV 


TABLE    OF    CASES. 


[Rcferviiccs  arc  to 
pariKjniphs  marked  §.] 


Brown  c.  Dickinson,   187. 

r.  Hull.  171. 

c.  Jones,    431. 

r.  Lacy,  459. 

r.  MDerniott.  316. 

r.  Keed.  439. 

c.  SpolVoid,  60. 
Browne  c.  Coit,  308. 
Bruce   r.  Lytic.  3!>7. 

c.  Wes'tcott,  436. 
Brush   r.  Beeves,   108. 
Buchanan  r.  Findkn-.  248. 
Buck   r.  Smiley.  47!). 
Buckncr   r.  Finley,  7. 

r.  Sayre,  11. 
Buckston   f.  Jones.  317. 
Bulger  r.  Roche,  495, 
Bull  r.  Sims.   149. 
Burba nk    r.   Beach.   353. 
Burbridpe   r.  :Manners,  455,  456. 
Burchtield  r.  Moore,  430. 
Burgess   c.  Northern    Bank  of   Ken- 
tucky. 424. 
r.  Vreeland.    379. 
Burke   r.  McKay,  347.   348. 
Burlei-ih    r.    Stott,    482. 
Burlinpame  v.  Foster,  376. 
Burmester  v.   Barron,  376. 
Burnes  r.  Scott,  60.  HI. 
Burrough  r.  Moss,  400. 
Burrow  r.  Zapp,  196. 
Burrows  r.  Jcmimo,  4S7. 
Burton  r.  Slaughter.  450. 
Bush  r.  Baldrey.  458. 

r.  Brown,  224. 
Bussard  r.  Levering.  330,  375. 
Butler  V.  Duval.  370. 

V.  Gambs.  478. 
Byrd  i*.  Holloway.  118. 
Byrom  r.  Thompson,  436. 

Cabot  Bank  v.  Morton,  424. 

r.  Warner.  374. 
Cahoun  r.  Moore.  119. 
Caldwell  r.  Cassidy,  464. 

r.  Evans,  131. 

f.  Lawrence.   398. 
Calhoun  r.  Calhoun.  106. 
Callahan  /•.  Bank  of  Kentucky,  172, 

371. 
Calvin  v.  Sterrett.  114. 
Camden    r.    Doremus,    343. 
Cammer  r.  Harrison.  411. 
Campbell  r.  Alford.  52. 

r.  French,  327. 

r.  Pet t CULM  11.   308. 
Canal  Bank  v.  Bank  of  Albany.  425 


Cannon  r.  Grigsby.  438. 
Capital  City  Ins.  Co.  r.  Quinn,  272. 
Cardwell   r.  Allen,  307. 
Carlton  v.  Woods,  109. 
Carpenter    r.    McLaughlin,   481. 
r.  ^lurphee,  409. 
r.  Northboro  Nat.  Bank,  426. 
Carr  r.  Nat.  Sec.   Bank,  38. 
Carroway    c.  Odeneal,  468. 
Carruthers  r.  West,  205. 
Carson   v.   Russell,  257. 
Carter  r.  Burley,  348. 
V.  Flower,  268. 
V.  Union  Bank,  376  . 
v.  Whalley,   140. 
V.  Zemblin,   409. 
Cartwright  r.  Williams,  169. 
Cashman  r.   llaynes,  82. 
Castle  V.  Rickley,   190. 
Catskill  Bank  r.  Stall,  284. 
Caulkins  v.   Whisler,  222. 
Caunt  r.  Thompson,  360. 
Caverick  r.  Vickery,  187. 
Caviness   v.   Rushton,  7(i. 
Cayuga    County    F.ank    r.    Bennett, 
371.  ' 
•V.  Hunt,  267.   319,  378. 
Central  Bank  v.  Allen,  393,  397. 
Challiss  r.  McCrum,  173. 
Chalmers  r.  Lanion,  201. 

V.  MclNIurdo,    188. 
Chamberlin   r.  White,  468. 
Champion  v.  Gordon,  31. 
Chandler  V.  Johnson,  103. 
Chanoine   V.  Fowler,  348. 
Chapman  v.  Black,   115. 
V.  Keene,  365. 
V.  Lipsconibe.  392. 
V.  Robinson,   491. 
r.  Rose.  210. 
r.  Wright.  77. 
Chappelear  r.  Martin,  454. 
Chappie  V.  Durston,  414. 
Charles  v.  Marsden,  205.  216. 
Charlton  v.  Reed.  79. 
Chase  v.  Taylor,  355. 
Chaters  r.  Bell.  351. 
Chautauqua  County  Bank  v.  Davis, 

314. 
Cheek  r.  Roper.  260. 
Cheney  r.   Cooper,  221. 
Cliester  Glass  Co.  r.  Dewey.  45. 

r.  Dorr.  242. 
Chick   r.   Pillsbury.   379. 
Chicopee  Bunk  r.   C}iay)in.   236. 

r.  Philadelphia  Bunk,  71,  342. 
Chipman   r.  Tucker,   212. 


[h'lft'retices  are  to 
punKjidiths  inurkid  §.] 


TABLE    OF    CASES. 


XV 


Chouteau   c.  Allen,  232. 

r.   Webster,  37(5. 
Christian  r.  Keen,  272. 
Christie  i\   Pearl,  280. 
Christmas  r.  Russell,  13. 
Church  V.  Clark,  322. 

V.  Howard,  432. 
Citizens'   Bank   r.  Lay,  45G. 
City  of  Aurora   V.  West.  23. 
Citv  of   Fort   Scott  r.  Sehulenberg, 

■  415. 
City    of    Willianisport    v.    Common- 
wealth,  147. 
Clallin  V.  Briant,  H)9. 

V.  Farmers'  Bank^  38. 

V.  Wilson,  185. 
Clark  V.  Caldwell.  lOl. 

V.  Connor,  405. 

r.  Peace    113. 

r.  Thayer,  248. 
Clark  Nat.  Bank  v.  Bank  of  Albion, 

38. 
Clarke  c.  Percival,  82. 

V.  Russell,  340. 

V.  Sigourney,  70. 
Clason  V.  Bailey.  58. 
Claxon  r.  Deniaree,  01,  107. 
Clay  County  v.  Oakley,  368. 
Clayton  r.  Gosling,  415. 
Cleveland   v.  Sherman,  55. 
Clewer  v.  Wytm.  20f>. 
Cline  r.  Templeton.  112. 
Clippinger   r.  Hepbaugh,  99. 
Clode  V.  Bailev,  370. 
Clopton  V.  Elkin,  109. 
Closson  r.   Stearns,   58. 
Clute  V.  Small,  438. 
Coates  V.  Doran,  40. 
Coburn  r.  Webb,  431. 
Cocke  V.  Dickens,  402. 
Coggill  r.  American  Ex.  Bank,  278. 
Cole  r.  Penncll.  155. 

V.  Withers.    459. 
Coleman  v.  Ewing,  410. 

V.  Forbes,  481. 

V.  Saver.    327.    330. 
Collins   r.'  Gilbert.  200. 

r.  Tiotter.  321. 
Colorado    Nat.    Bank    v.    Boettcher, 

299. 
Commercial  Bank  v.  Barksdale.  348. 
?•.  Gove.  372. 
r.  King,  379. 
Commercial   Nat.   Bank    r.   Proctor, 

141. 
Commissioners  r.  Chandler,  23. 


Commonwealth  i".  Chandler,  419. 

r.   Foster,  419. 

V.  Haas,  478. 

r.  .lohnson,   103. 

r.  Sankey,  420. 
Compton   r.  Blair,  387. 
Condon  v.  Pearce,  183. 
Conn  I".  Cobum,  152. 

V.  Thornton.  78. 
Connelly  r.   .McKean,  287. 
Conner  r.  Clark,   120,  200. 
Conrad  r.  P'isher,  55. 
Continental  Nat.  Bank  v.  Townsend, 
235. 

r.  Weems,   185. 
Cook   /•.    Baldwin,    298. 

V.  Lillo.   105. 

V.  Moffat.  488. 

V.  Satterlee.   89. 

V.  Wolfeiidale.  308. 
Cooke   v.  Branch  Bank,  137. 

r.  Colehan,  78. 

r.  State  Nat.   Bank,  38. 
Cookendorfer  v.  Preston,  328. 
Cooley  r.  Rose,  413. 
Coolidge  V.  Payson.  304. 

V.  Ruggles.  77. 
Cooper    r.   Meyer.   275.  278. 
Coore  r.  Callawav,  283. 
Copp  r.  McDugall,  172,  391. 
Coppmann    r.    Bank    of    Kentucky, 

455. 
Corbett  v.  Hughes.  457. 
Cornthwaite    r.    First    Nat.    Bank. 

117. 
Cota  r.  Buck.  78. 
Cotes  r.  Davis.  106. 
Couch  r.  Meeker,  212. 
Cowan  r.  Halleck,  70. 
Cowee  r.  Cornell.  99. 
Cowie  r.  Halsall.  430. 
Cowing  r.  Altman.  39.  62. 
Cowperthwaite  r.  Sheffield.  13,  366. 
Cowton  r.  Wickershani.  275. 
Cox  V.  Coleman.  300. 

V.  Nat.  Bank.  270.  311,  333. 

V.  Troy.  285. 
Cragin  r.  Lovell.  127. 
Craig  r.  State  of  Missouri.  43. 
Cramlington  r.  Evans,  454. 
Crampton  r.  Perkins.  200.  246. 
Crandall   r.   Schroeppel.   339. 
Crandell   r.  Vickery.  247. 
Cranston   r.  Goss.  70. 
I  Crawford  r.  West  Side  Bank.  429. 
'  Crawshav  r.  Collins,  141. 


XVI 


TABLE    OF    CASES. 


[liefcreiices  are  to 
Ijaiduraplia  marked  §.] 


Cregler  c.  Durham^  1-40. 
Ci-es\vell  r.  Lanahan,  14G. 
dim  r.  iStarkwealher,  415. 
Cromwell  r.  County  of  fc^ac,  217. 

I".  Hynson,  317,  372. 
Crooker  r.  HolmeSj  79. 
Crooksliank  c.  Kose,  115. 
Crosby  v.  Roub^  ISO. 
Crossan  v.  May,  214. 
Crosse   r.    Smith,   3G8. 
Crossly   c.   Hani,   245. 
Crosthwait  r.  Ross,  137. 
Crowley  r.   Barry,  319. 
Cruger  r.  Armstrong,  29. 
Crutchley  v.  Clarence,  404. 
Cumber   v.  Wane^  408. 
Cumberland  Bank  r.  Hall,  433. 
Curry  v.  Reynolds,  282. 
Curtis   V.  Leavitt,   144. 
Cushman   r.  Thayer  Mfg.  Co.,  48. 
Cutts  V.  Perkins,  13,  286. 

Da  Costa  r.  .Jones,  102. 
Daggett  V.  Whiting,  248. 
Dair  v.  U.  S.,  213. 
Dakin   v.   Graves,    356. 
Dale  V.  Pope,  60. 
Daniels  v.  Wilson,  217. 
Darbishire  v.  Parker,  378,  381. 
Darey  v.  Jones,  375. 
Darwin  v.  Rippey,  432. 
Davis  r.  Allen,  140. 

V.  Briggs,   399. 

V.  Clarke,  282. 

V.  Clemson,  491. 

V.  Coleman,   433. 

17.  Henry,  431. 

V.  Miller,  242.  453,  455,  474. 

V.  Smith,  139. 

r.  Thomas.  214. 

r.  Wait.  247. 
Davis  Machine  Co.  v.  Best,  251. 
Davison  r.  City  Bank,  457. 
Dean   r.   Newhall,   470. 

V.  Richmond,  400. 
Deardorf  v.  Thacher,  137. 
Deck   V.  Works,   196. 
Deener   v.  Brown,   31. 
Dehers  v.  Harriott,  314,  327. 
De  La  Vega  r.  ViaTina,  493,  496. 
Deminds  r.  Kirkman.  379. 
Demuth   r.  Cutler,   403. 
Dennie  v.  Walker,  412. 
Dennistoun   r.   Stewart,  351,   362. 
Denny  r.  Dana.  109. 
Derg'r.  Abbott,  393. 


Desesse  r.  Napier,  12. 
Desha  r.  Stewart,  271. 
Devendorf    r.    West   Virginia   0.    & 

O.  L.  Co.,  100. 
Devries  r.  Shumate,  69. 
Dewey  r.  Cochran,  477. 

v.  Reed,  431. 
De  Wolf  V.  Johnson,  491. 
Dews  V.  Eastham,  411. 
Dexter  Sav.  Bank  r.  Copeland,  113. 
Dick  r.  Leverick,  278. 
Dicken  r.  Hall,  374,  376. 
Dickens  v.  Beal,  355,  387. 
Dickerson  v.  Davis,   157. 

V.  Turner,  357. 
Dickinson  v.  Dickinson,   140. 
Dietz    v.    Harder,   431. 
Disher  v.  Disher,  69. 
District  of  Columbia  v.  Cornell,  147, 

245. 
Ditchburn  r.  Goldsmith,  102. 
Dixon  V.  Nuttall,  327. 
Dobbins  r.  Obcrman,  10. 
Dodge  r.  Nat.  Ex.  Bank,  33. 
Dollfus  V.  Frosch,  124. 
Donegan  V.  Wood,  326. 
Donnell  v.  Sav.  Bank,  387. 
Donner  v.  Remer,  372. 
Doty  V.  Knox  County  Bank,   109. 
Doubleday   r.   Kress,  454. 
Dougherty  r.   Deeney,  449. 
Dow  V.  Updike,  84. 
Dowdy  V.  McClellan,  106. 
Dowee   v.    Schutt,   214. 
Downer  v.  Reed,  214. 
Downes   v.  Church,  66. 
Downs  V.  Webster,  61. 
Drage  v.  Netter,  470. 
Drake  i\  Markle,  27. 

V.  Rogers,  62. 
Draper  v.  Hill,  468. 

V.  Jackson,  400. 

V.  Rice,  454. 

V.  Wood,  434. 
Drayton  v.  Dale,  276. 
Dresser  v.  M.  &   I.  R.  R.  Co.,  233, 

247. 
Drexler  v.  Smith,  428,  474- 
Drovers'    Nat.    Bank    r.     Provision 

Co.,  340. 
Dubois  V.  Mason,  190. 
Dubreys  v.  Farmer,  328. 
Dufour  V.  Oxenden,   301. 
Dugan    r.   United   States,   314,   453, 

454. 


[References  are  to 
paru<jrui)lis  marked  §.] 


TAULK    OF    CASES. 


XVI I 


Duggan   r.  King,  395. 

Duke  of  Norfolk  v.  Howard,  339. 

Diiniont  v.  i'ope,  35G. 

V.  Williamson,   173. 
Duncan  r.  McCullough,  397. 

V.  Pope,  213. 
Duncan  &  Sherman  v.  Gilbert,  230, 

249. 
Dunn  V.  Ghost,  216. 

V.  Weston,  242. 
Dupays   c.  Shepherd,  284. 
Durdeii  r.  Smith,  383. 
Durein  v.  Moeser,  238. 
Durnford  v.  Patterson,  332. 
Dutchess  County  Bank  v.  Ibbottson, 

355. 
Duvall  V.  Farmers'  Bank,  389. 
Dwight   V.   Newell,    119. 
Dye  V.  Scott,  389. 

Eagle  Bank  r.  Chapin,  379. 
Earhart  i;.  Gant,  238. 
Easeley  v.  Crockford,  228. 
Eason  v.  Isbell,  333. 
Eastman  v.  Plumer,  449. 

1-.  Turman,  308. 
Easton  v.  Hyde,  27. 
Eberhart  r.  Page,   193. 
Ebersole  v.  Ridding,  455. 
Edwards  v.  Thomas,  124. 
Ehrichs  v.  De  Mill,   14. 
Eldred  v.  Malloy,  77. 
Elford  t'.  Teed,  267,  322. 
Elias  V.  Finnegan,  237. 
Elliott  t\   Nichols,  481. 
Ellsworth  r.  Brewer,  408,  450. 

r.  Fogg,  408. 
Elmingcr  c.  Drew,   108. 
Ely   V.    Kilborn.    60. 
Emery  v.  Hobson,  388. 

r.  Vinall.  70. 
Emmett  r.  Tattenham,  403. 
English  V.  Wall,  257. 
Erickson  v.  Boehiii,  214. 
Ernst  V.  Steckman,  79. 
Erwin   v.  Downs.  319. 

r.  Lynn.    183. 
Espy  V.  IBank  of  CinciTinati,  30.  31, 

38. 
Essex  County  Nat.  Bank  r.  Bank  of 

Montreal.   37. 
Etheridge  v.  Gallagher,  111. 

r.  Ladd,  330. 
Evans  v.  Anderson,  486. 

V.  Gee.    171,    183. 

r.  Underwood,    78. 
ii 


Evansville  Nat.  Bank   i\  Kaufman, 

93. 
Everett  v.  Vendryes,  492. 

Fairbanks  r.  Snow,  224. 
Fairchild  r.  Adams,  402. 

r.  Holly,  4(;0. 
Fairley   v.  Koch,  401. 
Fairlie  v.  Herring,  306. 
Fall   River  Union  Bank  r.  Willard, 

265,  266. 
Fant  V.  Miller,  03,  486,  488. 
Fareira  r.  Gabell,   102. 
Farina  v.  Home,  53. 
Karis   r.  Wells,   168. 
Farmers'  Bank  v.  Allen,  353. 

r.  Bank  of  Allen  County,  36. 

V.  Duvall,  320,  379. 

V.  Gunnell,  375,  383. 

V.  Reynolds,  478. 
Farmers   &   Citizens'   Nat.   Bank   v. 

Noxon,  248. 
Farmers     &     Mechanics'     Bank     v. 

Butchers,  etc..   Bank,   38. 
Farquhar   v.   Southey,  437. 
Farwell  v.  Hilliard,  407. 
Faulkner  /•.   Bailey,  482. 

V.  Faulkner,    393. 
Fay  V.  Smith,  431. 
Fenn  v.   Harrison,   179. 
Fenno  r.  Gay,  415. 
Field  V.  Tibbetts,  243. 
Finan  r.  Babcock,  128. 
First  Nat.  Bank  r.  Bensley,  306. 

V.  Carson,  431. 

V.  Clark,  297. 

V.  Coates,  11. 

V.  Day,  470. 

■V.  Dubuque  S.  R.  R.,  11. 

V.  Gay,  84,  126, 

V.  Hatch,  265. 

V.  Hunt,  62. 

V.  Johns,  210. 

V.  Leach,  37. 

V.  Loyhed,  255. 

V.  Owen,  322. 

V.  Price,  327. 

r.  Reno  County  Bank,   185. 

r.  Ryerson,  360. 

V.  Whitman,  40. 

r.  Wood.  374. 
Fisher  /-.  Beekwith,  265. 

J'.  Bradford,  406. 

V.  Evans,  372. 

r.  Fisher,  236. 

r.  Leland,   239. 


XVllI 


TABLE    OF    CASES. 


[ References  are  to 
paraiintiihs  marked  S.J 


^ 


Fisk    c.   Brnckott,  494. 

Fitch  r.  Citizens'  Nat.  Bank,  367. 

r.  Haninier.  464. 

r.  Sutton,  468. 
Flapg  r.  Baldwin,  491. 
i'Maiinajjan    r.    Brown,    469. 
Flaum  V.  Wallace,   liO. 
Flecknei-  v.  Bank  of  United  States 

146. 
Fletelier  r.  Thompson,  89. 
Flour   City   Nat.   Bank   v.    Traders 

Nat.  Bank.   'Mi. 
Flower   v.  Sadler,    111. 
Flowers  r.  Billing,  58. 
Floj'd  Acceptances,  222. 
Fogarties  r.  State  Bank,  40. 
Folger  r.  Chase,  180,  342,  437. 
Follain  r.  Dupre,  377. 
Foot   V.  Sabin,   138. 
Forbes  v.  Boston  &  L.  R.  R.  Co.,  52. 

ly.  Cochrane,  485. 

';.  Omaha  Nat.  Bank,  373. 

^rd  V.   Beech,   470. 
Forman  v.  Wright.  113. 
Foss    v.   Nutting,   494. 
Foster  v.  Cliflford,  310. 
Foulke  r.  Fleming,  499. 
Fox  V.  Bank,  244. 
Fraker  r.  Little,  426. 
Frank  v.  Irgens,  91. 

V.  Lazier,  426. 

V.  Quast,  249. 
Franklin   Bank   r.   Lynch,  304,  305. 
Freeman  v.  Boynton,  259,  264. 
Freeman's  Bank  tK  Ruckman,  490. 
Freese  v.  Brownell,  488,  492. 
French  r.  Bank  of  Columbia,  387. 

r.  Turner,  179. 
Frick  I'.  Moore,  101. 
Friend  r.  Wilkinson,  366. 
Frost  r.  Wood,   124. 
Fuller  r.  Green,  437. 

V.  McDonald,  389. 
Fullerton  r.  Bank  of  United  States, 

.342,  379. 
Fulton  V.  Loughlin,  135. 

V.  McCracken,  366. 

Gaar  r.  Louisville  Banking  Co.,  84. 
Gaines  r.  Dor.sett,  80. 

r.   Sholton,    89. 
Gale  r.  Walsh.  340,  347. 
Gallery  r.  Prindlo.  308. 
Gall  way  r.    Matthews,    137. 
Gardner  v.  P>ank  of  Tennessee,  357. 

r.  Barger,   79. 

t\  National   City   Bank,    12. 


Garnett  v.  Woodcock,  323. 

Garrard  r.  lladdan,  439. 

Gates  V.   Beecher,   259. 

Gay  V.  Kingsley,  165. 

Gazzam  v.  Armstrong,  290,  291,  292, 

293. 
Geill  V.  Jeremy,  379. 
George  r.  Surry,  58. 
Georgia  Nat.  Bank  i;.  Henderson,  34. 
Geralopulo   v.   Wielerj  463. 
Gibbon  v.  Scott,  59. 
Gibbs  V.  Howard,  498. 
Gibson  v.  Carruthers,  51. 

V.  Smith,  306,   309. 
Gilbert  v.  Dennis,  339,  362,  363. 

V.  Iron  Mfg.   Co.,  46. 
Gill  V.  Morris,  114. 
Gillespie  v.  Hannahan,  397. 
Gilman  v.  County  of  Douglas,  458. 

t\  New  0.  R.  R.  Co.,  250. 
Gimmi  v.  Cullen,  216. 
Gist  V.  Lybrand,  373,  374. 
Glasscock  v.  Glasscock,  92. 
Glatt  17.  Fortmann,   131. 
Click   V.   Crist,  482. 
Glicksman  v.  Early,  362. 
Glossup  !-,  Jacob,  288. 
Goddard  v.  Lyman,   399. 

v.  Merchants'   Bank,  451. 
Godwin  ly.  Crowell,  103. 
Goetz  V.  Bank,  111,  273. 
Colder  v.  Foss^  405. 
Goldman  v.  Blum,  59. 
Goldsmid    r.    Lewis    County    Bank, 

230. 
Goldsmith   r.   Blane,  372. 
Good  V.   Elliott,   102. 

V.  Martin,   193,   194. 
Goodale  r.  IToldridge,   103. 
Goodall  V.  Polhill,  293. 
Goodman  tK  Plarvey,  228,  245. 

r.  Simonds,  200. 
Goodnow  V.  Warren,  371. 
Goodsell  r.  Myers,  154,  155. 
Goodwin  r.  American  Nat.  Bank,  34. 

V.  Jones,  494. 

V.  McCoy,  310. 

t'.  Nickerson,  61. 
Gordon  r.  Adams,  69. 

r.  Brown,  472. 

V.  Mulcher.  40. 

r.  Sutherland,  434. 
Gore  V.  Gibson,   161. 
Goudy  P.   Gillam,  482. 
Gough  V.  Findon,  69. 
Gould  r.  Robson.  475. 

V.  Segee,  230. 


[Refrretices  ore  to 
putayidphH  markcil  §.J 


TABLE    OF    CASES. 


XIX 


Goupy  t'.  Harden^  2(59. 
(Jovcinor  v.  Daily^  121. 
Gowan  v.  Jackson,  3G9. 
Grafton  Bank  v.  ("ox,  392. 
Graluun  v.  Kolxsitson,  415. 

r.  Sangston,  37(5. 
Graninicl  v.  C'anner,  11,  13. 
Grand   Hank  r.   Hlanehard,  343. 
(Jranitc   Bank    v.  Ayres,   335. 
Grant  r.  Sliaw,  285. 

r.  Wood,  77. 
Graves  v.  American  Ex.  Bank,  451. 
Gray  v.  Bank  of  Kentucky,  248. 

r.  Cooper,   153. 

V.  Milner,  282. 
Great  Lake  r.  Brown,  259. 
Greele  r.  Parker,  302,  304. 
Greelov  v.  People,  23. 

(•.'Thurston,  410. 
Green  r.  Raymond,  309. 
Greenough  v.  Smead,  194,  259. 
Greensdale  v.  Dower,  134. 
Gregory  r.  Allen,  389. 

V.  Leigh,    117. 

V.  Wendell.  102. 
Griffin  r.  GofT,  320. 
Griffith  r.  Sitgreaves,  113,  477. 
Grimstead  r.  Briggs,  438. 
Griswold  v.  Davis,  70. 

r.  Waddiugton.  163. 
Grosvenor  r.  Stone,  368. 
Grover  r.  Grover,  308. 
Grutacap   v.  Woulloise.  83. 
GuidoTi  r.  Rohson,  399. 
Gunnis  v.   Weigley,  475,   476. 
Guthrie  r.  ]\Iurphv.  151. 
Gwinnell    v.  Herbert,    168,   189. 

Haas  r.  Sackett,  169. 
Hacker  v.  Brown.   108. 
Haddcn  r.  Rodkev,  KlS. 
Haddock  v.  Woods,  87 
Haiglit   r.  .Toyce.  221 
Hale  r.  Hougliton, 
Halifax   r.    Lvle.  275. 
Hall   r.  Fuller,  439. 
Hallenbach   r.   Dickinson,  481. 
Haly  r.  Lane,   177. 
Hani  r.  Smith,  103. 
Huinilton    v.    Hooper,    43 

r.  Vought.  229. 

V.  Wilson,  251. 
Hammond  r.  Barclav,  286. 

r.  Dufresne.  38^. 
HaTiauer  r.  Doane.  109.  246. 
Handv  r.  Siblev.  236. 


Hanessler  r.  Greene,  204. 
Harden   v.   Boyce,  384. 
Harding    /•.    Edgeeumbe.    482. 
Hardman  v.   Bellhouse,  468. 
Hardy  r.  Waters,  153. 

r.  Woodroofe.  333. 
Hare  v.  Henty,  322. 
Harker   r.   Anderson,  29. 
Harpending  r.  Daniel,  398. 
Harper  r.  iiuthr,  494. 

V.  West,  298. 

r.  Young,  221. 
Harris  v.  Brooks,  477. 

1-.  Clark,  2.j9. 

V.   Lewis,  80. 

r.  Robinson,  392, 
Harrison    v.   Edwards.  497. 

r.  Nicollet  Xat.  Bank.  34. 

r.  Richardson,    157. 

r.    I'obinson,  366. 

V.  Ruscoe.  365,  366. 
Harsh   r.   Klepper.  431,   441. 
Hart  r.  Clouser,  431. 

r.  Stevens.  400. 

r.  Stickney.  243. 
Harter  r.  Kernochan,  23. 
Hartford  Bank  r.  Barry,  312. 
Hartley  r.  Case.  456. 

r.'Manton,  469,  470. 

r.  Rice,    103. 

V.  Wilkinson,  59. 
Harvev  r.  Cane,  285. 

I?."  Girard  Xat.  Bank,  311,  340, 
450. 

V.  Martin,  299. 
Hascall    r.    Life    Assn.    of   America, 

281. 
Haskell  r.  Champion,  433. 
Hatch   r.  Burroughs,  104. 
Haughton   r.   Ewbank,   125. 
Hawkey  r.  Borwick,  333. 
Haxtoii  r.  Bishop,  398. 
Hay   r.  Goldsmidt,    124. 
Haynes  r.  Rudd,  103. 
Hays  V.  Hathorn,  403. 

r.  N.  \N.  Bank,  358. 
Hayward  r.  Bank  of  England,  34L 

r.   French,  136. 
Haywood  r,  Stearns,  204. 
Heartt  v.  Rhodes,  457. 
Heath   c.  Blake.  427. 
Heaton    r.   Myers.    127. 
Hcdger    r.    Stcavenson.    363. 
Hedlev  v.  Bainbridijre.  137. 
HelTron  v.  Hanaford,  138. 
Hehner  v.  Krolick,  227. 


XX 


TABLE    OF    CASES. 


[References  arc  to 
inirmjraphs  marked  §.] 


Hemminway  r.  Stone,  434. 
Henry  r.  Jones,  330. 

i\  Sneed,  253,  255. 
Herrimon  r.  Shomon.  457. 
Hertell   r.   Bogert,    119. 
HeurU'Uiatte  r.  Morris,  272,  274, 
llevey's  Case,  419. 
Hewins  V.  Cargill.  431. 
Hickligg  V.  Hardey,  258. 
Hilborn  r.  Alford,  58. 
Hildeburn  v.  Turner,  354. 
Hill  V.  Heap,  258. 
V.  Henry,  411. 
V.  Lewis,  328. 
V.  Norvell,  330,  376. 
r.  Shields.  202. 
Hilton  r.  Shepherd,  365,  385,  395. 
Hindlaugh   r.  Blakey,  301. 
Hindley  v.  Marean,  496. 
Hine  v.  Allely,  393,  456. 
Hinton  r.  Bank  of  Columbus,  272. 
Hoagland  v.  Erck,  81. 
Hoare  v.  Cazenove,  289. 

r.  Graham,  59. 
Hoffman  &  Co.  r.  Bank  of  Milwau- 
kee, 111,  273. 
Hofheimer  r.  Losen.  307. 
Holcomb  t'.  Wyckoff,  216,  217. 
Holden  v.  Cosgrove,  106,  113. 
Holdsworth  v.  Hunter,  66. 
Holland  v.  Hatch,  437. 
Holmes   v.  Kerrison,  327. 
Holt  V.  Ross,  278. 
Holtz  r.  Boppe,  259,  318. 
Home  Bank  v.   Drumgoole,   77. 
Hook  r.  Pratt,  185. 
Hooper  v.  Keay,  400. 
Hoopes  V.  Collingwood,  431. 
Hoover  v.  Kilandor,  214, 
Hopkinson  r.  Forster,  40. 
Horah   r.  Long,  402. 
Horn  V.  City  Bank,  433. 
Hortsman    v.    Henshaw,    274,    278, 

423,   424. 
Houek  V.  Graham,  61,   433. 
Houghton  V.  Francis,  437. 
House  V.  Adams,  383,  384, 
Houston  r.  Bruner,  194 
Howard  Bank  v.  Carson,  355. 
Howard  r.  Stratton,  61. 
Howe  V.  Bradley,   401. 
V.  Merrill,  175. 
V.  Ould,  69. 
V.  Potter,  217. 
Howell  I'.  Crane,  242. 
Howry  r.  Eppinger,  229. 


Hoyt  I".  Lynch,  57, 

■i:,  Wilkinson,  408. 
Hubbard  v.  Chapin,  221. 

V.  Matthews,  319,  368,  369. 
Hubbly  V.  Brown,  475. 
Huffaker  v.  National  Bank,  348. 
Huffmanns  v.  Walker,  449, 
Hughes  r.  Fisher,  59,  306. 
Hulbert  v.  Douglass,  252. 
Hull  V.  Conover,  313. 
Hume  V.  Watt,  369. 
Humphrey  v.  Hitt,  478. 
Humphreys    r.   Guillow,   434, 
Humphreyville  V.  Culver,  398. 
Humphries  v.  Nix,  73. 
Hunt  V.  Bell,  102, 

V.  Bridgham,  482. 

V.  Johnson,  499. 

V.  Massey,  155. 

V.  Maybee,  342. 
Hunter   v.    Robertson,  482. 
Huntington  i'.  Branch  Bank,  209. 
Huse  V.  Hamblin,  27. 
Hussey  i\  Jacob,  292. 
Hutchins  i\  State  Bank,  45. 
Hutchinson  r.  Bogg,  113. 

V.  Crane,  399. 
Hyde  -v.  Goodnow,  488. 
Hyslop  V.  Clark,  109. 

17.  Jones,  374. 

Indiana    Nat.    Bank    v.    Holtzclaw, 

222. 
Ingalls  V.  Lee,   171. 
Ingham  v.  Dudley,  89. 
Ingraham  f.  Gibbs,  65. 
Ingram  v.  Forster,  287. 
Insurance  Co.  r.  Wilson,  355,  366. 
Ireland  v.  Kip,  372,  373, 
Irvin  V.   Villiar,    102, 
Irvine  v.  Lowry.  87. 
Ivory  V.  Michael,  431, 

Jackson  v.  Hudson,  281, 

V.  Love,  312. 

17.  Newton,  320. 

V.  Parks,  165. 

V.  Van  Dusen,  157. 
Jacob  V.  Hart,  429, 

V.  Town,  372, 
James  v.  Wade,  383. 
Jameson  r.  Swinton.  322,  378,  380. 
Jansen  v.  Thomas,  327. 
Jarvis  r.  Garnett,  334, 

V.  Wilson,  75, 


[References  are  iu 
ininii/ruphs  marked  §.J 


TAitLK    OF    CASES. 


XXI 


Jellerson    County    f.    Railroad    Co., 

93. 
Jenners  v.  Howard,  161. 
Jenys  v.  Fawler,  273. 
Jeune   v.   Ward,   21)!). 
Jewell  c.  Wriylit,  500. 
Johnson  i.  Hank,  451. 

v.  Bank  of  United  States,  430. 

V.  lierlizheiiiier,  141, 

V.  Butler,  231. 

V.  Catlin,  402. 

V.  Chadwell,  158. 

V.  Collings,  303. 

V.  Frisbie,   83. 

f.  Henderson,  87. 

V.  ^Meeker,  221. 

V.  IMiteholl,  183. 

V.  Tliaver,  12. 

V.  Underbill,  46. 
Johnson  Township  r.  Citizens'  Bank, 

76. 
•Johnston  r.  Latlin,  46,  49. 
Johnston  Harvester  Co.  v.  McLean, 

439. 
Jones  r.  Darch,  276. 

■V.  Fales,  343. 

V.  Fort,  453. 

V.  Hook,  495. 

V.  Jones,    482. 

V.  Lewis,  373. 

V.  Simpson,  82. 
Joseph  V.  Salomon,  367. 
Joslyn    V.   Smith,   481,   482. 
Josselyn  r.  Lacier,  81. 
Julian  r.  Shorebrook,  308. 
Juniata  Bank  r.  Hale,  318,  360,  365. 

Kampmann  v.  Williams,  324. 
Kanaga   r.   Taylor,   486. 
Kaufman   r.  Barrin^er,  298. 
Kearney  4".  Kinj;.  9. 

V.  W.  Granada  Mm.  Co.,  64. 
Keeler  i".  Bartine,  409. 
Keenan  v.  Nash,  281. 
Keller  r.   Hicks,'  149. 
Keller  r.  Whitney,  186,  243. 
Kelloji'i    r.   Curtis.   237. 

r.   French.  254. 
Kempner  r.  Corner,  238. 
Kennedy  r.  Oeddes.  303. 

V.  Coodman,    110. 

r.  Knifiht.  491. 
Kenner  r.  Creditors,  332. 
Kerrick  v.  Stevens,  403. 
Kershaw  r.  Cox,  436. 
Keyes   r.   Fenstermaker.  324. 

r.  M,um.   114. 


Kilgour  V.   Finlayson,   124. 
Kiinbro  r.  Bullit,   137. 
Kincaid   c.  Higgins,  79. 
King   V.    Baldwin,   478. 

V.  Crowell.  330,  339. 

V.  Ellor,  75. 

V.  Faber,  137. 

V.  Fleece,  403. 

V.  Gillet,  407. 

I".  Hamilton,  88. 

V.  Holmes,  330. 

■V.  Sarria,  480. 

V.  Thom,  117. 
Kinney  v.  Ford,  71. 
Kinyon  r.  Wohlford.  207. 
Kirk  r.  Strickwood,  1U3. 
Kirknian   c.   Benham,   117,   118. 
Kirthind   r.  Wanzer,  347. 
Klein   r.  Keyes,   110. 
Klopfer  V.  Levi,  274. 
Knapp  V.  Mayor  of  Hoboken,   147. 
Knickerbocker  Ins.  Co.  v.  Pendleton, 

353. 
Knight  r.  McRevnolds,  80. 
Knill  r.  Williams,  435. 
Knisely   v.  Sampson,  02. 
Knox  Co.   r.  Aspinwall,  23.   129. 
Konig  r.  Bayard,  289,  291. 
Koontz  V.  Central  Nat.  Bank,  426. 
Kost    V.    Bender,    112. 
Kountz  V.  Kennedy,  443. 
Krampt's  Exr.   r.  Hatz's  Exr.,   195. 
Kuenzi    r.    Elvers,   499. 
Kvmtz  V.  Tempel,  330. 

Lacey  r.  Woolcot,  140. 

Lafayette  Bank  r.  St.  Louis  Stone- 
ware Co.,  145. 

Laflin  &  Rand  Powder  Co.  v.  Sins- 
heimer.   111. 

Lakeshore  Nat.  Bank  v.  Colliery  Co., 
125,  308. 

Lamar  v.  Brown,  431. 

Lamlx>rt,  Ex  parte,  402. 

Lambert  r.   Ghiselin,  392. 

Lancaster  Co.  Nat.  Bank  r.  Huver, 
233. 

Lancpy  r.  Clark.  449. 

Landrum  r.  Trowbridge.  250,  257. 

Lang  /•.  Smyth,  00. 

Langenlierger   r.  Kroeger.  339. 

Langston  r.  Corney,  300. 

Langton  r.  Lazarus,  280. 

Lannay  v.  Wilson,  .399. 

Lanussa  r.  Massicot.  334. 

Laprice  r.  Bowman,  106. 

Lash    r.  Edcorton.   459. 


XXll 


TABLE    Ol-'    CASES. 


[References  are  to 
'paragraphs  marked  §.J 


LiUlnop  r.  Commercial  Bank,  485. 
Laubauch    r  rersell,  9G. 
Law  r.  Painell,  398. 
Lawicmt'  r.  liassett,  488. 
r.   Duuglicrty,  86. 
V.  Fussell,  182. 
La\v.son  r.  FaniuMs"  Bank,  307,  380 

r.  Sayder,  478. 
Lean  v.  Lozardi,  Oi. 
Leathers    V.    Commercial    Ins.    Co. 

384. 
Leavens  V.  Thompson,  127. 
Leavitt   V.  Simes,   344. 
Lebanon  Sav.  Bank  f.  Penney,  (51. 
Lee  r.  Selleck,  4!)4.  500. 

r.  Starbird.  431. 
Leftly  f.  Mills,  312.  351,  410. 
Legge  V.  Thorpe,  387. 
Legro  r.  Staples,  82. 
Lehman  r.  Jones,  3!)7. 
Leighton  r.  Bowen,  113.^ 
Le  Neve   r.  Le  Neve,  255. 
Lenheim  r.  Fay,  246. 
Lennig  v.  Ralston,  9. 
Lenox  v.  Cook.  413. 
V.  Leverett.  381. 
V.  Prout,  478. 
V.  Roberts,  378. 
Leonard  r.  ^lason,  57. 

r.  Phillips.   437. 
Lerned  v.  .Johns,  127. 
Le  Roy  r.  Beard,  496. 
Leslie  v.  Hastings.  301. 
Lester  f.  Given,  40. 
Lewis  V.  Bakewell,  371. 
V.  Gompertz,  363. 
V.  Jones,  468. 
Lime  Rock  F.  &  M.  Ins.  Co.  v.  Hew- 
itt, 82. 
Lincoln   &  Kennebec   Bank   r.   Page, 

343. 
Lindell  r.  Rokes.  97. 
Lindf-nberger  V.  Beall,  375. 
Lindsey  r.  :McClellan,  27. 
Lingle  r.  Cook,  459. 
Lionberger  r.  Kinealv,  449. 
Litchfield  Bank  v.  Peck,  238. 
Little  V.  Blunt,  415. 

V.  Ph«'nix  Bank,  32. 
r.  Slackford.  75. 
Littledale  r.  Mayherry,  354. 
LivinL'ston    r.  Roosevelt,   284. 
Llovd  r.  Lee.  165. 

"  r.  West  Branch  Bank,  148. 
Loan  Assn.  r.  Topeka,  23. 
Lockett's  Case.  419. 


Lockhart  v.  Hullinger,  102. 
Lockwood  r.  Crawford,  339. 
Logan  V.  Cassell,  403. 
Lomax   r.   Picot,  186. 
Lon.sdale  r.  Brown,  314. 
Loring  r.  Hailing.  330. 
Louisiana  v.  Wood,  426. 
Louisiana    Ins.    Co.    v.    Shanibuiyh, 

397. 
Louisiana  State  Bank  v.  Ellery,  368. 

v.  Rowell,  373. 
Louisville  R.  R.  Co.  v.  Caldwell,  91. 

Louviere  r.  Laubray,  409. 

Lovejoy  r.  Whipple,  70. 

Lovell  r.  Evertson,  399. 
V.  Hill,  76. 

Lovinger  v.  First  Nat.  Bank.  426. 

Low  V.  Argrove,  435. 

Lowden  v.  Nat.  Bank,  439. 

Lowe  V.  Peers,  103. 

Lowell  r.  Boston,  23. 

Lowenthal   v.   Chappell,   481. 

Lucas  r.  Ladew,  499. 

Lunt   r.   Adams.  323. 

Lyman  r.  Gedney,  454. 

Lynch  r.  Reynolds,  476. 

Lynn  Nat.  Bank  r.  Smith,  370. 

Lyon  V.  Aiken,  469. 

Lyons  r.  Holmes,  58. 

Lytle  r.  Wheeler,  106. 

McClellan  r.  Coffin,  86. 
McCormick  r.   Littler,   IGO. 

V.  Trotter,    87. 

V.  Williams,  238. 
McCrady   r.   Jones,   481. 
McCramer  v.  Thompson,  433. 
McCullis  V.  Bartlett,   160. 
McCurbin   r.  Turnbull,  430. 
McCurdy  r.    Bowes,  81. 
McCutchen  v.  Rice,  299. 
McDonald  r.  Lee,  332. 

V.  Magiuder.  408. 
McElvain  r.  :Mudd,  106. 
McEvers  r.  Mason,  302. 
McFarland   r.  Pico,  412. 
McGregor  r.  Bishop,  107. 
McGruder   r.   Bank   of  Washington, 

311,   340,   397. 
Mclntyre  r.  Yates,  100.      . 
McMoiiigal  v.  Brown,  324. 
Mc^Iurchey  r.  Robinson,  329. 
McNamara  v.  Gargett,  109. 
McNamee  V.  Carpenter,  399. 
McNinch  V.  Ramsey,  80. 


[RcferenceH  (ire  to 
paiuyruitlis  marked  §.] 


TAHLE    OF    CASKS. 


XXIH 


McVean  f.  Scott,  433. 

McVei{,'h  c.   Bank  of  Old   Dominion, 

374. 
Maccoun   r.   Atchafalaya   Hank,  350. 
Mace  r.  KiMinedy,  24(1. 
MacGregor  r.   Rhodes,  424. 
Mackay  v.  St.  Mary's  Cliuicli.  ll!l. 
Maddur   r.    Hevan,  457. 
Magoun  c.  Walker,  357. 
Magruder    c.   Union   Bank,   318. 
Mahaiwe  Bank  r.  Douglass,  430. 
Mahoney  r.  Ashland,  7. 
Maitland    c.    Citizens"    Nat.    Bank, 

235.  236. 
Maiden  Bank  v.  Baldwin,  338. 
Maltz  V.  Fletcher,  108. 
Mammon  r.  Hartman,  193. 
Manchester   Bank  r.  Fellows,  412. 
Manchet    r.   Cason.  437. 
Mandeville  r.  Welch,  10,  11,  12,  13. 
Maniort   r.  Roberts,  404. 
Mann  r.  King,  122. 

V.  Moors,  376. 
Manufacturers'  Nat.  Bank  r.  Newell 

232. 
Marbourg  r.  Brinkman,  324. 
Marr  f.  Johnson,  376. 
Marret  r.  Equitable  Ins.  Co.,  82. 
Marryatts   r.   White,  459. 
Marsh    r.   Gold,    137. 

r.  ITavford,  405. 
Marshall  r.  B.  &  O.  R.  R.  Co.,  99. 

r.  Clary,  308. 

r.  Gougler,  434. 
Martendale  r.  Follett,  432,  441. 
Martin  v.  Bacon,  300. 

V.  Chauntrv,  89. 

r.  Graginsky.  392. 

r.  Mayo,  155. 

r.  Morgan,  452. 

V.  Muncv.  272. 

r.  Wade",  103. 
]Mason  r.  Barff,  299. 

r.  Bradley,  433. 

r.  Franklin.  346. 

r.  Hunt,  308. 

r.  Metcalf,  77. 

r.  Morgan,   165. 

r.  Runisey.  284. 
Massachusetts  B;uik  r.  Oliver.  371. 
Massie  v.  By  id,  415. 
Massman   r.  Holscher,  212. 
^faspero  r.  Pedesclaux,  371. 
:\raster  r.  :\Iiller.  429. 
Matthews  r.  Haydon.  316. 

r.  Houghton,  80. 


Maury  c.  Coleman,  214. 
May  r.  Boisseau,  95.  400. 

V.  Chapman,  252. 

V.  Coffin,  397. 

V.  Kelly.  2S1. 
Mayhew  v.  Boyd,  478. 
.\leacher  r.  Fort,  423,  424. 
.Mead  r.   Young,    182,  419. 
.Meadow    ■.  liird,  99. 
Mechanics'  l'>ank  r.  Bank  of  Colum- 
bia,   12G. 

r.  Livingston,  285. 
^Icchanics,  etc..    Bank   v.   Crow.   98. 

V.  Farmers,  etc..  Bank,  52. 
Mechanics'    Bank.    Assn.    v.    Place, 

372, 
ifedburv  r.  Watrous,  154. 
Melick  V.  First  Nat.   Bank,  477. 
Mellish  r.  Rawdon,  208. 
Mercantile  Bank  v.  McCarthy,  372. 
Merchants'    Bank    r.   Birch,   371. 

V.  Elderkin,   342. 

V.  McClelland,  237. 

V.  Spicer,  29,  58. 

r.  State    Bank,   31,   34,   .30,   38. 
Merchants'  Nat.  Bank  v.  Comstock, 
113. 

V.  Ritzinger.  34. 
Merritt  v.  Duncan,  238. 
Mersman  r.  Werges,  427. 
Mertens  v.  Withington,  461. 
:\rerz  r.  Kaiser,  314,  372,  404. 
Metcalfe    r.   Richardson.   300. 
Metzger  r.  Waddell,  320. 
Mever  r.  Haworth,  165. 
Me'vers  r.  Standart,  309. 
:\richigan  Bank  r.  Eldred,  209. 
Michigan   Ins.   Co.    r.    Leavenworth, 

62. 
Michigan    State    Bank     r.    Leaven- 
worth,  305. 
Miers  r.  Brown,  360.  364. 
Millard  r.   Barton,  232. 
Miller  r.  Austeti.  27. 

r,  Bovkin.   234. 

V.  Butler,  298. 

r.  Finlev.   161. 

V.  Gilliland.  429. 
■    r.  Reed.  434. 
ATilliken    r.    Brow-.    469. 
:Million  r.  Ohmsberg.   103. 
Mills  V.  Bank  of  United  States,  328, 
344.  362. 

r.  Barber.   113. 

r.  Davis.  415. 

V.  I'owlkes,   459. 


XXIV 


TABLE    OF    CASES. 


[References  are  to 
paragraphs  marked  §.] 


Mills  r.  Glcason,  2:?. 

r.  Kuvkendale,   81. 
r.  Mills.  99. 
Milnt's   r.   Duiu'an,  452. 
Mineral  Point  R.  R.  Co.   r.  Barron, 

405.  49S. 
]\Iishor  r.  Carpenter,  175. 
Mitchell  c.  Baring,  333. 
V.  Cross,   379. 
r.  Culver,  429. 
r.  De  Grand.  257,  327,  330. 
r.  Railroad  Co.,  145. 
Mitford  r.  Walcott,  290. 
Mobile  Sav.  Bank  r.  McDonnell,  415. 
Moffat  r.  Edwards,  77. 
Moge  V.  Herndon,  442. 
Moggridge  r.  Jones,  108. 
Moline,  Ex  parte,  371,  456. 
Molson's  Bank  v.  Howard,  297. 
Monroe  v.  Fohl,  459. 
Monson  r.  Drakoley,  433. 
Montague  v.  Perkins,  285,  310. 
Montgomery  County  Bank  v.  Albany 

City  Bank.  287. 
Montpeiier  Bank  r.  Dixon,  478. 
Moodie  v.  Morrell,  317. 
Moody  V.  Threlkeld,  285. 
Moore  v.  Baird,  216. 

V.  Hutchinson,  441. 
V.  Robinson,  214. 
Morgan    r.  United   States,   21,    203, 

239,  324. 
Morris  v.  Husson,  376. 

r.  Morton,  249. 
Morrison  r.  Bailey,  31. 

V.  Buchanan,' 206,  287. 
Morse   v.  Chamberlain,  377. 
Mortee  v.  Edwards,  80. 
Morton  i'.  Naylor,  12,  14. 

■V.  Rogers.  113. 
Moses  V.  McTerlar,  426. 
Mosher  r.  Allen,  405. 
Mowat  v.  Brown,  09. 
Moxon  V.  Pulling,   179. 
Mailman  v.  DEguino,  269,  381. 
Muncy     Borough     School     Dist.     V 

Commonwealth,  324. 
Munn  r.  Baldwin,  375. 
Munro  v.  King,  61. 
Murphy  v.  Keyes,  110. 
Murray  v.  Beckwith,  229. 
t'.'Lardner,  229. 
V.  Snow,  468. 
Musson  V.  Lake,  339,  353,  358. 
Mutual  Nat.  Bank  v.  Rotge,  37. 


Nailor  r.  Bowie,  339. 
Nance  v.  Lary,  222. 
Nash  r.  Fugate,  213. 
National  Bank  v.  Brewster,  165.^ 
V.  Cade,   375. 

V.  Dorset  Marble  Co.,  190; 
V.  Gunhouse,   256. 
j;.  Howe,  255. 
r.  Kirbv,  243. 
V.  Kirk,  103. 
V.  Law,   138. 
(•.  Smoot,  488. 
V.  Wells,  145. 
National  Exch.  Bank  v.  Wilder,  55. 
National  State  Bank  r.  Rising,  438. 
National     State    Capital    Bank     v. 

Noyes,  137. 
Nave  V.  Richardson,  316,  353. 
Nazro  v.  Fuller,  430. 
Neal  V.  Irving,   125. 
N.  E.  Bank  V.  Lewis,  412. 
Neff  V.  Horner,  431. 
NefT's  Appeal,  478. 
Neil  V.  Case,  443. 
Nelson  v.  Fotterall,  354,  357. 

V.  Manning,  80. 
Nevada  Bank  r.  Luce,  297. 
Nevins    v.    Bank    of    Lansingburgh, 

372. 
New  V.  Walker,  104. 
Newberry  V.  Detroit,  etc..  Iron  Co., 

47.  ■ 
Newcomb  i'.  Raynor,  475,  476. 
Newell  r.  Gregg,  243. 

V.  Mayberry.  440. 
New  England  Mortgage  Co.  V.  Gay, 

255. 
Newhall  r.  Central  P.  R.  R.  Co.,  51. 
New  Orleans,   etc.,    i\   Montgomery, 

241. 
New  York,  etc.,  Co.  v.   Selma  Sav. 

Bank,  368. 
Niagara  Bank  v.  Fairman,  309. 
Nichols  V.  Gross,  402. 
V.  Nichols,  97. 
V.  Webb,  348. 
Nicholson   v.   Sedgwick,   26. 
Nicolay  v.  Fritschle,  403. 
Nicolls  V.  Rodgers,  495. 
Nightingale  v.  Withington,  153. 
Norris  r.  Badger,  453. 

V.  Despard,   383,  384. 
North  British  Ins.  Co.  v.  Lloyd,  477. 
North  River  Bank  v.  Aymar,  123. 
Northwestern  Coal  Co.  v.  Bowman, 
30,  34,  375. 


[References  are  to 
paragraphs  marked  §.] 


TABLE    OF    CASES. 


XXV 


Norvill  V.  Hudgins,  250. 
Nott  V.  Beard,  353. 

Oakley  v.  Ooddeen,  253. 

Ocean  Nat.  Bank  v.  Williams,  347, 

348. 
Odd  Fellows  v.  First  Nat.  Bank,  126. 
Ogden   V.   Dobbin,   300. 

V.  Saunders,  174,  175,  326. 
Ogle  V.  Graham^  431. 
O'Keefe  r.  Dunn,  203. 
Oridge  v.  Sherborne,  321,  327. 
Oriental  Bank  v.  Blake,  371. 
Ormsbee  r.  Howe,  252. 
Orr  V.  Maginnis,  347. 
Ort  r.  Fowler,  210. 
Osborn  r.  Adams  Co.,  23. 

V.  Bryce,  474. 

V.  Nicholson.  lOG. 
Osmond  r.  Fitzroy,  158. 
Otis  V.  Barton,  4G4. 
Otisfield  V.  Mayberry,  453. 
Otsego  Co.   Bank  r.  Warren,   354. 
Oulds  V.  Harrison.  204. 
Outhwaite  r.  Luntlcy,  429. 
Overman  v.  Hoboken  City  Bank,  287. 
Overton  r.  TVler,  1. 
Owen  r.  Half.  441. 

17.  Moody.  494. 

V.  Van  Uster,  284. 

Pacific  Bank  r.  Mitchell,  449. 

Packwood  v.  Gridlev,  254. 

Paese   v.    Hirst.   40.5. 

Page  V.  Gilbert.  303. 

Paige  V.  Carter,  02. 

Palmer  v.  Hummer,  79. 

Pardee  v.  Fish,  27. 

Parish  v.  Stone,  107. 

Park  V.  Nichols,  274. 

Parker  v.  City  of  Syracuse,  12. 

V.  Gordon,  306.  322,  378. 

f.  Reddick,  324. 
Parks  j;.  Evans,  488. 
Parmelee  v.  Williams,  479. 
Parr  v.  Jewell,  205. 
Partridge  v.  Bank  of  England,   32. 

V.  Davis,  179. 
Paton  i\  Coit.  221. 
Patrick   r.  Beazley,  373. 
Patten  v.  Gleason,  248. 
Patterson  v.  Todd,  171. 

r.  Wright,  243. 
Pattison  v.  Hull,  459. 
Pavne  r.  Commercial  Bank,  478. 

V.  Elliot,  45. 


Peacock  v.  Pureell,  359. 

V.  Rhodes,  183. 
Pearl   v.  McDowell,   160. 
Pearsall  i;.  Dwiglit,  485,  480. 
Pearson  r.  Garrett,  77. 
Pease  v.  Landauer,  13. 

V.  Warren,  131,  313. 
Peasley  v.  Boatwright,  92. 
Peck  V.  Hozier,  496. 
Pendleton   r.   Knickerbocker,   320. 
Penny  v.  Graves,  60. 

V.  Innes,    189. 
People  r.  Getchell,  420. 
People's  Bank  v.  Brooks,  342,  353. 

V.  Gridley,  48. 

V.  Keeeh,   369. 
Percival  v.  Frampton,  98. 
Perkins  v.  Barstow,  481. 

V.  Franklin   Bank,   328,   332. 

V.  White,  247,  391. 
Perring  v.  Hone,  434, 
Perry  v.  Barret,  195. 

v.  Harrington,  308. 
Peters  r.  Hobbs,  370. 
I'liel  V.  Vanbatenberg,  453. 
I'lielps  V.  Stocking,  378. 
Phillips   r.   Astberg,   317. 

V.  Frost,  298. 

V.  Gould,  360. 

V.  McCurdv,  346. 

V.  Meillv,  61. 

V.  Paget,  153. 

r.  Plato,   195. 

V.  Poindoxter,  357. 

r.  Thurn,  295. 
Philliskirk  v.  Pluckwell,  400. 
Philpott  V.  Bryant,  257,  318. 
Pier  r.  Heinrickshoffen,  340. 
Pierce  v.  Cate,  410. 

V.  Indseth,  348,  490. 
Piercy  v.   Piercy,  434. 
Pillow  r.  Hardeman,  371. 
Pine  r.  Smith,  244. 
Pinkerton   v.   Manchester  R.  R.,  48. 
Piiikney  r.  Hall,  .5,  284. 
Pitman  v.  Brcckenridgp,  358. 

V.  Crawford.  81. 
Plain  r.  Roth,  459. 
Planters'  Bank  v.  Kesee,  30,  31. 
Planters'     Rice     IVlill     Co.     v.    Mer- 
chants' Nat.  Bank,  54. 
Piatt  V.  Beebe.  98. 

r.  Jerome,  215. 

r.   Snipes,   110. 
Polhill  r.  Walter.  281. 
Polk  c.  Spinks,  374. 


XXVI 


TABLE    OF    CASES. 


[Refcniiccti  are  to 
lHU'(i(jruijhs  marked  §.] 


Pomeroy  r.  Ainsworth,  490. 

r.  Tanner.  479. 
Poorman  r.  Mills,  404. 
Pope  r.  Huth,  13. 
I'orter   c.    Cushnian,  313,  454. 

r.  Pittsbui-r    Steel    Co.,    201. 
Potter  r.  Earnest,  CO. 

c.  Tyler,  108. 
Powell  r.  C'oninionwealth,  418. 

V.  Jones.   300. 
Power  V.  Hathaway,  495. 
Powers  i\  Waters,  248. 
Pratt  r.  Parkman,  52. 
Prescott  Bank  r.  Caverly,  166,  269. 
Preston  v.  Jackson,  115. 
Price  V.  Jones,  78. 

V.  Keen,  111. 

V.  Young,  378,  390. 
Prins  r.  LiuhIxm-  Co.,  251. 
Pulsifer  r.  Hotchkiss,  108. 
Purcell   r.  Allemong,  29. 
Purviance  r.  Jones,  69. 
Putnam  v.  Sullivan,  209,  220. 

Quak«'r  City  Bank  V.  Showacre,  488. 
Quinibv  /•.  \Merritt,  86. 
Quinn'r.  Tuller,  94. 

Raborg  V.  Peyton,  274. 

Kailroad  Co.  r.  County  of  Otoe,  23. 

V.  Howard.  44. 

t\  Nat.  Bank,  8. 

r.  Schutte,  217. 
Rand  v.  Barett,  449. 

V.  Dow,    168,   404. 

V.  Revnolds,  377. 
Raphael  r.  Bank  of  England,  228. 
Rasmussen  v.  State  Nat.  Bank,  468 
Ray  r.  Smith,  396. 

V.  Tubbs,   151. 
Raymond  r.  Middleton,  63. 
Read  v.  Bank  of  Kentucky,  348. 

V.  Wilkinson,    300. 
Reamer  v.  Bell,  182. 
Reed  r.  Batchelder,  155. 

V.  Roark,  58. 

V.  Wilson,  322,  328,  330. 
Rees  r.  Conofocheague  Bank,  404. 

V.  Warwick.  302. 
Regina  v.  Wilson,  418. 
Reid  r.  Coats,  359. 

V.  Morrison.  397. 

V.  Payne.   375. 
Renner  ?;.  Bank  of  Columbia,  328. 
Rex  V.  Atkinson.  420. 

V.  Hales,  418. 


Rex  v.  Hart,  418. 
V.  Palmer,  421. 
V.  Parke,  419. 
V.  Post,  420. 
i;.  Rogers,  419. 
V.  Treble,    420. 
V.  Webb,  419. 
Rey  V.  Simpson,  193,  194. 
Rhett  V.  Poe,  369,  387. 
Rhode  V.  Proctor,  371. 
Rhodes  v.  Lindley,  86. 
Richards  v.  Richards,  400. 
Richardson  v.  Carpenter,  81. 
V.  Ellet,  62. 
V.  Lincoln,  70. 
V.  Mellish,  103. 
V.  Strong,   160. 
Richmond  v.  Diefendorf,  231. 
Ridgely  Bank  r.  Patton,  28. 
Riegel   r.  Cunningham,  242. 
Riggin  r.  Collier.  9. 
Robb  r.  Bailey,  399. 
Robbins  V.  Eaton,  155. 
Roberts  v.  Austin.  40. 
V.  Bethel,  286,  288. 
V.  Hall,  238. 
V.  Hardy,   163. 
V.  Mason,  393. 
V.  Peake,  77. 
V.  Roberts,  103. 
V.  Smith,  86. 
Robertson  r.  Allen,  177. 
Robins  v.  Gibson,  387. 
Robinson  r.  Ames,  257,  413. 
V.  Berryman,  433. 
V.  Bland.   109. 
V.   Blen,    320. 
V.  St.  Louis,  23. 
r.  Wilkinson,   405. 
r.  Yarrow.   277.   278,   279,   451. 
Rock  County  Nat.  Bank  v.  HoUister, 

403. 
Rogers    r.    Blythe,   103. 
V.  Burlington.  23. 
V.  Hadley,  227,  446. 
Rohde,  Ex  parte,  397. 
Rolin  V.  Stewart,  41. 
Roof  v.  Stafford,  154. 
Ross  V.  Bedell,  387. 

V.  Herd,   389. 
Rothschild   i'.   Currie.   358. 
Roundtree  v.  Baker,  106. 
Rowe  r.  Young,  262. 
Rowland  r.  Fowler,  251. 
Royce  r.  Nye.  405. 
Rubelman  v.  McNichol,  403. 


[Hrfrrencdf  arc  in 
panujiaiiha  marked  §.] 


TABLE    OF    CA.SES. 


XXV  il 


Rucker    r.    Wadliii^itdii,    118. 
Ruddcll    i.    I'lialor,   210. 
Ruir  r.  Webb,  7."^. 
Ruiuh'l  r.  Kctilcr,  lol. 
Rupsell   r.  Lw,  ir»l. 
L\  I'hillips,  -J-jH. 
Rust  1-.  Gott,  102. 
Ruthind,  etc.,  R.  R.  Co.  v.  Cole,  402. 

Saliino  r.  Bank  of  Worcester,  48. 

Sackett  v.  Kcllav,  21.5. 

Saoo  Nat.   Bank  c.  Sanborn,  376. 

Saeribor  r.  lirown.  348. 

Sager  r.  Tupper,  58. 

St.  John  r.  Kcdnian.  125. 

V.  Roberts,  370. 
St.  Louis  Bank  r.  Altheimor,  309. 
Salinas  r.  Wright.  77. 
Salisbury   r.  Bartleson,  337. 
Salt  Springs  Nat.  Bank  v.  Burton, 

322. 
Salter  r.  Burt,  330. 
Sanderson  v.  Oakev,  393. 
Sands   r.   Smith.  4fll. 
Saunderson   r.   .Judge,  342. 
Savage  r.  Merle,  449. 
Savings  Bank  r.  Shaffer,  441. 
Savings    Bank    of    Kansas    v.    Nat. 

Bank  of  Commerce.   104. 
Sawyer  v.  Wiswell,  112,  114,  201. 
Saylor   V.  Bushong,   40. 
Soaife  r.  Byrd,  70. 
Schepp  r.  Carpenter,  100. 
Schimmelpennich     i'.    Bayard,    291, 

304. 
Schmidt    r.   Gates,   481. 
Schlesinger   v.  Arline.  84. 
Schindel    v.  Schmaelter,   58. 
Schneider  r.  Norris,  58. 
Schofl.'ld  r.  Bavard,  293. 
Scholev  V.  Waisbv,  453. 
Schultz  V.  Ashley.  285. 
Schutt  V.  Evans,  114. 
Schuylkill  County  r.  Copely.  220. 
Schwalm  v.  'Mclntvrc,  432. 
Scolluns  r.  Flvn,  102. 
Scotland  Couiitv  r.  Hill,  201. 
Scott  r.  LcfTnrd.  400. 

r.  Ocean  Bank.  1.32. 
Scoville  r.  Canfidd.  493. 
Sears  v.  Wright.  79. 
Seaton   v.  Scnvill.  370,   380. 
Sebas  r.  Abithol.  309. 
Second  Nat.  Bank  r.  Howe.  95. 
Spcnritv  Bank  r.  Luttgen,  51. 
Seeley  "r.   Engell,    107. 


Si'clcy  r.  Reed,  17-'{. 

Seeligson  r.  J^ewis,   115. 

Seneca  County  Bank  c.  Neass,  357, 

370. 
Sessions  i".  Mosely,  398. 
Seventh  Nat.   Bunk  v.  Cook,  40. 
Sewancc  Mining  Co.  r.  McCall,  124. 
Seymour  r.  Farrell,  193. 
Sliadc  r.  Crcviston,  407. 
Shank   r.  Butsch.  58. 
Sharpc  r.  Bcllis,    128. 
Shaw  r.  Railroad  Co.,  51. 

r.   Spencer,  120. 
Shiulor  r.   Mix,  374. 
Sluild  r.   Brett,  319,  .300,  412. 
Shelburne      Falls      Nat.      Bank      t'. 

Townslev,  373,   375,  377. 
Shclton  r.  Braithwaite,  302. 
Shepherd  f.  Evans,  402. 

r.  Graves,  62. 
Sheply   r.   Waterhouse,  481. 
Sherrington  r.  Yates.  400. 
Sherwood  r.  Roys,  398. 
Shipnian  r.  Cook.  359. 
Shirley  v.  Howard,  113. 
Shoe  &  Leather  Nat.  Bank  r.  Wood. 

490. 
Shoemaker  r.  Benedict.  481. 

r.  Meclianics'    Bank,    374. 
Shultz  r.  Payne.  02. 
Shuttleworth  v.  Noves,  100. 
Shutts  r.  Fingar.  476,  478,  479. 
Sil)ree  r.  Tripp.  408. 
Siebeneck  r.  Anchor  Sav.  Bank,  479. 
Siegerson   r.  ]\Iathews,  389. 
Simon    r.    Ingham.  400. 
Simonton's  Estate,  213. 
Simons  r.  Morris.  242. 
Sims  r.  Nat.  Commercial  Bank,  ;>11. 
Singleton    r.    Townsend.    481. 
Skclton  r.  Dunston,  322,  353. 
Slack  r.  Kirk.  188. 
Sloan   r.  :McCarty.  77. 
Sloman   r.  Cox.  441. 
Small  r.  Franklin  Mining  Co.,  457. 
Smallev   r.   Wright.   371. 
Siiiedes   r.   Bank  of   Ctica,   132.   ItUi. 
Smith  ;-.  Abbott,  308. 

V.  Allen,  70. 

V.  Bank  of  Washins^ton.  412. 

r.  Caldwell.   482. 

r.  Chester.  425,  451. 

r.  Hanie,   399. 

r.  .Tansen.  231. 

V.  Kendall.  83. 

r.  Lockridjre,  281. 


XXVUl 


TABLE    OF    CASES. 


[References  are  to 
pdriKjrdpli-s  niorked  §.] 


Smith  r.  McCluie,  70. 
V.  McNair.  424. 
V.  Marsack,  1(5G,  276. 
■r.  Melton,  284. 
V.  Muncie  Nat.  Bank,  272. 
V.  Kightingale,  82. 
V.  Philbrick,  337. 
V.  Screven.  459. 
V.  Smith,  437. 
r.  Stranger,  130. 
r.  Whiting.  119,  362. 
Snead  r.  Coleman,  117,  118. 
Solarte  c  Palmer,  364. 
Solser   V.  Brock,  477. 
Sondheim  r.  Gilbert,  221. 
Soule  V.  Bonney,  103. 
Southcot  V.  Watson,  24. 
Spalding   r.    Andrews,   285. 
Sparhawk  V.  Willis,  401. 
Spaulding  r.  Kelly,   136. 
Spear  r.  Pratt,  298,  301. 
Speck  r.  Pullman  Car  Co.,  239. 
Spencer  v.  Harvey,  389. 
Sperry  r.  Horr,  84. 
Spiller  r.  Creditors,  459. 
Sprisg  (•.  Cunv.  314. 
Sproat  r.  [Matthews,  306. 
Spurgeon  r.  McPheeters,  94,   110. 
Stafford  v.  Yates,  365. 
Stainback  v.  Bank  of  Virginia,  123, 

316.   354,  357. 
Stanley  r.  [NIcElrath,  360. 
Stanton  v.  Blossom,  365,  412. 
Stanwood  V.  Stanwood,  400. 
Staples  r.  Franklin  Bank,   410. 
Star  Ins.  Co.  v.  Bank,  224. 
Stark  V.  Alford,  398,  409. 
Starr  v.  PJchmond,  459. 
State  V.  Cillev,  432. 
V.  Crawford,  29. 
V.  Loomis,  55. 
r.  :\Iadison.  23. 
V.  Peck,    213. 
V.  Polk,  433. 
r.  Taylor,  84. 
State  Bank  v.  Fearing,  424. 
V.  Hennen,  372. 
V.  McCoy,  161. 
State  ex  rel.  v.  Osakee  Township,  23. 
Staunton  v.  Ji.  R.  Co.,  81. 
Steams  r.  Burnham,  494. 
Steele  v.  McDowell.  118. 
V.  McKinlav,  301. 
r.  Soulo.    481. 
Stephens  r.  Monongahela  Nat.  Bank, 
93,  248. 


Stephenson    v.   Dickson,   379. 
Stevens  v.  Graham,  429,  431,  432. 
Stevenson  v.  Woodhull,  454. 
Stewart  v.  Lispenard,  158. 
Stivers  r.   Prentice,  317. 
Stoddard  v.  Kimball,  216,  230,  248. 
Stokes  V.  Anderson,  71. 
Stone  V.  Peake,  108. 

V.  Seymour,  459. 
StrachaTi  v.  Muxton,  59. 
Straughan   v.  Fairchild,  235. 
Strawbridge  v.  Robinson,  9. 
Stroh  r.  Hinchman,  125. 
Stroud  V.  Marshall,  157. 
Studebaker  v.  Man.  Co.,  253. 
Styles   V.   Wardle,    02. 

Siidler  v.  Collins,  430. 

Sullivan  v.  Bonesteel,  103. 
V.  Rudisill,  433. 

Sultzbacher  v.  Bank  of  Charleston, 
393. 

Supervisors  i;.   Schenck,  129,  145. 

Sussex  Bank  r.  Baldwin,  334,  335. 

Sutcliffe  V.  McDowell,  387. 

Sutton  V.  Toomer,  327. 

Swan   r.   Steele,    135. 

Swansey  v.  Breck,  308. 

Swasey  v.  Vanderheyden,  152. 

Swayze  v.  Britton,  365. 

Sweat  V.  Hall,  400. 

Sweet  V.  Swift,  367. 

Swift  V.  Tyson,  8,  98,  100,  111. 

Swire  i\  Redman,  479. 

Swope  r.  Leffingwell,  449. 
V.  Ross,  271. 

Taft's  Case,  419. 

Talbot  V.  Nat.  Bank,  452. 

Tannant    r.    Rocky    Mountain   Nat. 

Bank,  126. 
Tardy  v.  Boyd,  384. 
Tassel  r.  Cooper,  41. 
Tassey  v.  Church,  308. 
Tayloe  v.   Sandiford,  459. 
Taylor  v.  Bank  of  Illinois,  354. 

V.  Croker,  275. 

V.  Newman,  306. 

V.  Thomas,  71. 
Texas  Banking  Co.  v.  Turnley,  234. 

V.  Hardenburg,   203. 
Texas  Land  Co.  v.  Carroll,  127. 
Tliackeray  v.  Blaekett,  387. 
Thatcher  V.  Dinsmore,   120. 

r.  West  River  Nat.  Bank,  248. 
Thayer  r.  Buffum,  399. 


[References  are  to 
paragraphs  marked  §.] 


TAIJLK    OF    CASES. 


XXIX 


The  Distilled  Spirits,  255. 

The  Julia,  1G3. 

Tliillnian  V.  Gueble,  370. 

Third  Nat.  Bank  r.  Laiige,  120,  251. 

r.  Snyder,  137. 
Thomas   r.    Bank   of    British   North 
America,  30. 

r.  Shoemaker,  321). 

r.  Thomas,   110. 
Thompson  v.  Brown,  4G0. 

17.  Flower,  314,  409. 

r,  Harrison,  102. 

v.  Ketchum.  321,  400. 

V.  Samuels,  104. 

r.  Sloan,  88. 

r.  Warren,    100. 

V.  Wharton.  99. 

V.  Williams,  361. 

V.  Wilson,  494. 
Thorington  v.  Smith.  105. 
Thornburg  i:.  Emmons,  268. 
Thornton  v.  Rankin,  120. 
Thrasher  v.  Everhart,  496. 
Throop  V.  Grain  Cleaner  Co.,  14. 
Thurman  v.  Van  Brunt,  409. 
Ticonie  Bank  v.  Stackpole,  347. 
Tidmarsh  V.  Grover,  430. 
Tindal  i\  Brown,  364,  378. 
Todd  V.  Bank  of  Kentucky,  490. 

V.  Wick,  201. 
Toledo  Iron  &  Agr.  Works  V.  Heis- 

ser,  128. 
Tolman  v.  Haurahan.  284. 
Tompkins  v.  Woodward,  138. 
Tonne  v.  Wasson,  403. 
Tooke  i\  Newman,  236. 
Tooting  r.  Hubbard,  281. 
Torinus  r.  Buckham,  108. 
Torrey  v.  Foss.  387. 
Townsend    r.    Dry    Goods   Co.,   336, 
364. 

V.  Lorain  Bank,  364. 

V.  Star  Wagon  Co.,  430. 
Township   of  Burlington  v.  Beasly, 

23. 
Township  of  Pine  Grove  V.  Talcott, 

148. 
Townsley  v.  Sumrall.  100,  256,  257, 

268,  355. 
Trapp  c.  Spearman,  430, 
Treanor  V.  Yingling,  478. 
Tredick  r.  Wendell  339. 
Trickey  v.  Larne,  108. 
Trimbey  V.  Vigmer,  494. 
Troy  City  Bank  r.  Lauman,  309. 
True  V.  Collins,  377. 


Tucker  v.  Randall,  413. 
Turner  v.  Browder,  274. 

I'.  Keller,  175. 

V.  Leach,  305,   395. 

V.  Ross,   481. 

V.  Samson,  370. 
Tutt  V.  Thornton,  437. 
Twopenny   v.   Young,  470. 
Tyree  v.  Lyon,   138. 
Tyrell  v.  Cairo,  499. 
Tyson  v.  Oliver,  370. 

Union  Bank  v.  Fowlkes,  353. 

V.  Hvde,  347. 

r.  Willis,  319,  369. 
Union  Nat.    Bank    v.    Barber,    200, 
406. 

V.  Eraser,   104. 

r.  Marr,  Admr.,  384. 

r.  Roberts,  430. 
United  States  v.  Bank  of  Metropolis, 
111,   310. 

V.  Barker,  257,  379. 

V.  Clinton  Nat.  Bank,  426. 

r.  Dodge  Co.,  23. 

V.  January.  459. 

V.  Kirkpatrick,  459. 

V.  Linn,  434. 

r.  Nat.  Park  Bank,  425,  426. 
United  States  Bank  v.  Binney,  136. 

V.  Carneal,  322. 
Uther  V.  Rich,  227. 

Valett  V.  Parker,  104,  221. 
Valk  V.  Gaillard,  368. 

V.  Simmons.  387. 
Vancleave  v.  Beach,  472. 
Vandewall  v.  TTrrell.  461.  463. 
Van  Duzer  r.  Ilowe,  280,  439. 
Van  Enian  v.  Stanchfield,  168. 
Van   Rensselaer's   Exrs.    v.  Roberts, 

400. 
Van  Steenburg  r.  HoflFman,  165. 
Vanstrum  v.  Liljengren,  309. 
Varnum  v.  Milford,  255. 
Vathir  v.  Zane,  113. 
Vinton  r.  King,  243. 
Violett  r.  Patton,  93,  209. 
Vogle  V.  Ripper,  440. 
Voorhees  v.  Atlee,  389. 
Vreeland  r.  Blunt,  13. 

Wackerbath,  Ex  parte,  462. 
Wager  r.  Brooks.  428. 
Wagner  r.  Diodrich.  24S. 
r.  Kenner,  329. 


XXX 


TABLE    OF    CASES. 


[Rrfrroicrs  arc  to 
Ijanti/idiili.s  iiifirlccd  §.] 


Walker  r.  Bank  of  New  York,  307. 

c.  Kimble,  401. 

v.  Turner,  350. 
\Yall  c.  Monroe  County.  147. 
Wallace  r.  Ajrrv,  208." 

V.  Crillco.  *323. 

r.  MeConnell.  475. 
Walnisle\    r.  Action,  353. 

r.  Cooper,  470. 
\\  alter  r.     Haynes,  377. 
Walters  v.  Brown,  374. 
Walton  r.  Hastinfrs.  429. 
Walwin  i\  St.  Quintin,  408. 
Walz  V.  Alback,  193. 
Vv  anger  r.  Tupper,  347. 
Ward  V.  Allen.  280.  298. 

V.  Churn.  213. 

V.  Doaue,    103. 

v.  Smith,   131.   164. 

r.  Vass.   478. 
Warden   r.  Howell.  249. 
Warden  r.  Rvan.  428. 
Wardlow  r.  List,  438. 
Warren  r.  Chapman,  109. 

V.  Gilman,  367. 

V.  Lynch.  496. 

r.  Martin,   139. 
Warrington   r.   Karlv.   431. 
Warwick  r.    Bruce.  "l53. 
Waterman   v.  Vose.  431. 
Watson  V.  Flanajian,  111. 

r.  Heasel.    151. 

r.  Hoajf.  215. 

V.  Lorinp:,    .340. 

V.  Tarpley,   256. 
Wavland  University  v.  Boormati.  60. 
Weakly  r.  Bell.  376. 
Weaver  v.  Barden,  247. 

r.  Bromlev,  399. 

r.  Carnal  1.  126. 
Webb  V.  Fairmaucr.  327,  410. 

r.  Mears.  257. 
Weber  r.  Or  ten,  312. 
Webster  v.   Switzer.  120. 

V.  Ray.  127. 
Wegner  r.  Biering,  114. 
Weir  r.  Walmsley,  428. 
Weismer  /;.  Village  of  Douglas,  23. 
VVelby  V.  Drake.  468. 
Welch  r.  Lindo,  314. 
Wells  V.  Brigham.  310. 

V.  Morrison,  468. 
Wemple  v.   Dangerfield.   379. 
Wessell  p.  Glenn.   438. 
West  V.  Brown.  379. 
Western  Bank  v.  Mills,  113. 


Westgate  l\  Healy,  398. 
Wharton   c  Morris,  87. 
Wheatley  r.  Strobe,  10,  75. 
Wheeler  r.  Field,  392. 

V.  Guild,   453,   455. 

V.  .lolmson,  406. 

r.   \\'el)ster.  282. 
Wheelock  v.  Freeman,  59,  420,  440. 
Whidden  v.  Seelye,  499. 
Whipple   r.    Stevens,  482. 
Whitcomb   r.   Whiting,   481. 
White    V.    Continental    Nat.    Bank, 
280,   425,    426. 

V.  Hopkins,  476. 

V.  Nat.  Bank,   185. 

V.  Smith,  77. 

V.  Stoddard,  315,  360,  395. 
Whiteford   r.    Burckmeyer,  406. 
Whitehouse  r.  Hansen,  194. 
Whitesides  v.  Northern  Bank,  430. 
Whitewell  v.  Johnson,  343. 
Whitmer  v.  Frye,  431. 
Whittier  r.  Havdeu,  404. 
Whitwell  V.  Winslow,  60. 
Whitworth  i\  Adams,  95. 
Widoe  V.  Webb,  109. 
Wiggle   r.  Thomasson,  412. 
Wilcox  V.  Routh,  368. 
Wilds   r.   Savage.  305. 
Wildman,  Ex  parte,  407. 
Wilkinson  v.  Adams,  363. 
Williams  r.  Bank  of  United  States, 
372. 

V.  Cheney,  221. 

r.  Drexei,  278 

V.  Germaine,  294,  296. 

V.  Hoogewerff,   335. 

V.  James,  409. 

V.  Jones,   407,   495. 

V.  Mathews,    140. 

V.  Moore,    155. 

r.  Potter,   185. 

V.  Putnam,   347,   500. 

V.  Tishomingo  Sav.  Inst.,  178. 
Williamson   r.  Harrison,  152. 

V.  Watts,   152. 
Willis  r.  Green,  259. 
Willoughby  r.  Moulton,  58. 
Wilson  r.  Codman's  Executor.  ISO. 

r.  Ellsworth,    110. 

r.  Holmes,  185. 

r.  Lazier.  221,  490. 

r.  Second  Nat.  Bank,  255. 
Wilson     Sewing     Machine     Co.      t*.' 

Spears,  406. 
Windham  Bank  v.  Norton.  320.  -•'■'5. 


[References  are  to 
puruyruphu  marked  §.] 


TAHLE    OF    CASES. 


XXXl 


Wintermute  v.  Post,  308, 
Wisdom  r.  Beokei.,   117. 
Wise  r.  I'rowse,  407. 
Wood  V.  Callaghiin,  Ml. 

r.  Coii,   ;J-2S. 

V.  Pugli,  2i)0,   201,  403. 

L\  Steele,   420. 
Woodhridge  r.  IJiigham,  342. 
Woodfonl   c.  Dorwiii,  70. 
Woodhousi'  V.  Simmons,  482. 
Woodman   c.  Clmrcliill.  201. 

r.  Thurston,    388. 
Woodrutr  c.  Hill.  497. 

c  IMeichants"   Hank,  33, 

r.   Monroe,  422. 
Woods  r.  Armstrong,  104. 

V.  North,  84. 
Woodtlioi'))o  i\  Lawos.  3()0. 
Woodward  r.  Row,  256. 
Woodwortli  V.  Anderson,  431. 

r.  Bank  of  America,  438 
VVoonsocket    Inst,   for    Sav.    v 

Ion,  481. 
Worden  v.  Nourse,  366. 


327. 


Bal- 


Worden  i:  Salter,  193. 
Workman  r.  Wriglit,  422. 
Wcjrks  V.  Hershey,  i  9. 
Worth   i.  Case,   78. 
Wright  c.  Andrews,  390. 

V.  Laing,  4o9. 

r.  Robinson   &   Co.,   404. 

V.  Travers,  84. 
Wvatt   /■.    Ilodson,   482. 
WVllie    r.   Pollen,  25.5. 
wVnne  r.  Kaikes,  285.  280. 

^'ale  r.  Wood.  9. 
Yeager   r.   Falwell,  389. 
York  r.  Jones,  434. 
Young  V.  Bryan.  347. 

v.  Durgin.  375. 

r.  Grote.  280. 

r.  Harris.  490. 

r.  Lehman,  280.  426. 

r.  Ward.  400. 

Zellner  r.  Cleveland,  120. 
Zimmerman  r.  Rote,  439. 


THE  ELEMENTS  OF  THE  LAW 


OF 


NEGOTIABLE  INSTRUMENTS, 

(xxxiii) 


ELEMENTS  OF  THE  UW 


OF 


NEGOTIABLE  INSTRUMENTS. 


BOOK  I 

THE  MAKING  OF  THE  INSTRUMENT. 


CHAPTER  I. 

NATURE,    HISTORY,   AND     USES    OF    NEGOTIABLE   INSTRU- 
MENTS. 


SECTION  I. 

NATURE,    ORIGIX,    AND    HISTORY    OF   BILLS    AND   NOTES. 

§  1.  An  instrument  is  called  negotiable  when  the  legal 
title  to  the  instrument  itself,  and  to  the  whole  amount  of 
money  expressed  upon  its  face,  may  be  transferred  from  one 
to  another  by  indorsement  and  delivery  by  the  holder,  or 
by  delivery  only.  The  peculiarities  which  attach  to  nego- 
tiable paper  are  the  growth  of  time,  and  were  acceded  for 
the  benefit  of  trade. 

It  was  a  rule  of  the  common  law  of  England,  that  a  chose 
in  action  —  by  which  is  meant  a  claim  which  the  holder 
would  bo  driven  to  his  action  at  law  to  recover  —  could  not 
be  assigned  to  a  stranger,  our  forefathers  conceiving  that  if 
claims  and  debts  could  be  assigned,  ''  pretended  titles  might 


2  NEGOTIABLE    INSTKUMENTS.  §  1.. 

be  granted  to  great  men,  whereby  right  might  be  trodden 
down  and  the  weak  oppressed,  which  he  common  hiw  for- 
bickh^h."  ^  The  first  rehixation  of  .  (^his  rnle  was  made  in 
respect  to  bills  of  exchange,  and  was  gradnally  extended  to 
notes  and  other  secnrities,  until  the  rnle  itself  disappeared. 
Bnt  while  all  choses  in  action  are  now  transferable,  the 
negotiable  instrnment  is  the  only  species  which  carries,  by 
transfer,  a  clear  title  and  a  fnll  measure;  and  like  an  instru- 
ment under  seal,  imports  a  consideration.  It  has,  therefore, 
three  j^eculiar  and  distinguishing  characteristics: 

First.  Respecting  the  title. —  If  a  horse,  or  other  personal 
chattel,  or  a  nonncgotiable  instrument,  be  stolen,  no  pur- 
chaser, however  innocent  or  ignorant  of  the  theft,  can  acquire 
title  against  the  true  owner,  who  may  at  any  place,  and  at 
any  time,  identify  his  property  and  reclaim  it.  But  if  a 
negotiable  instrument,  payable  to  bearer,  be  stolen,  and  trans- 
ferred by  the  thief  to  a  third  person  in  the  usual  course  of 
business,  before  maturity  and  for  a  valuable  consideration, 
the  person  so  acquiring  it  may  hold  it  against  the  world. 

Second.  Respecting  the  amount. —  If  a  nonncgotiable  note 
be  assigned,  the  assignee  steps  into  the  shoes  of  the  assignor, 
and  if  the  instrument  has  been  paid,  or  is  subject  to  any 
defense  or  equity  against  the  original  maker,  they  attach  to 
and  encumber  it  into  Avhosesoever  hands  it  may  fall.  But 
a  negotiable  paper  carries  the  right  to  the  whole  amount 
it  secures  on  its  face,  and  is  subject  to  none  of  the  defenses 
which  might  have  been  made  between  the  original  or  inter- 
vening parties,  against  anyone  who  acquired  it  for  value, 
with  notice,  in  the  usual  course  of  business  and  before  ma- 
turity. It  is  a  circulating  credit  like  the  currency  of  the 
country,  and,  before  maturity,  the  genuineness  and  solvency 
of  the  parties  are  alone  to  be  considered  in  determining  its 
value.    It  has  boon  fitly  termed  "  a  courier  without  luggage."  ^ 

Third.  Respecting  the  consideration. — By  the  common  law, 
an  instrument  under  seal  imports  a  consideration,  by  virtue 

iCoke,  Litt.  214a;  Ghitty  on  Bills  [*7],  9;  Edwards  on  Bills,  55. 
2  Overton  v.  Tyler,  3  Barr,  346,  Gibson,  C.  J. 


§  2.     NATURE,   OKKilX,   AND    HISTORY  OF   BILLS   AND   NOTES.     3 

of  the  solemn  ceremony  of  its  execution ;  and  no  other  non- 
negotiable  instrument  does.  A  negotiable  instrument,  how- 
ever, by  the  usages  of  merchants,  prinui  facie  imports  a  con- 
sideration. As  between  immediate  parties,  the  true  state  of 
the  case  may  be  shown,  and  the  jiresumption  of  consideration 
rebutted.  But  when  the  instrument  has  passed  to  a  bona  fide 
holder  for  value,  and  before  maturity,  no  want  or  failure  of 
consideration  can  be  shown. 

§  2.  Bills  of  exchange  were  probably  the  first  instruments 
for  the  payment  of  money  that  were  accorded  a  negotiable 
quality,  though  promissory  notes,  being  simpler  in  form, 
were  doubtless  used  as  evidences  of  debt  before  bills  of  ex- 
change came  in  vogue  amongst  merchants.  Certainly  these 
two  securities  were  recognized  as  negotiable  instruments  be- 
fore any  other  paper  representatives  of  money  or  property 
passed  currently  from  hand  to  hand  in  like  manner  as  money; 
and  from  them,  as  fruitful  parents,  have  sprung  all  the 
varieties  of  negotiable  instruments  now  known. 

§  3.  Origin  and  history  of  bills — ■  In  respect  to  bills  of 
exchange,  it  is  said  by  Pothier  that  there  is  no  vestige 
of  them  among  the  Romans,  or  of  any  contract  of 
exchange;  for  though  it  appears  that  Cicero  directed  one 
of  his  friends  at  Rome,  who  had  mon^y  to  receive  at  Athens, 
to  cause  it  to  be  paid  to  his  son  at  that  place,  and  that  friend 
accordingly  wrote  to  one  of  his  debtors  at  Athens,  and 
ordered  him  to  pay  a  sum  of  money  to  Cicero's  son,  although 
it  is  doubtful  whether  this  amounted  technically  to  a  bill 
of  exchange.^ 

Chancellor  Kent  finds  warrant  for  the  opinion  that  bills 
were  used  among  the  Greeks,  while  Story  adheres  to  a  con- 
trary view.* 

Blackstone  says :  "  This  method  is  said  to  have  been 
brought  into  general  use  by  the  Jews  and  Lombards  when 
banished  for  their  usury  and  other  vices,  in  order  the  more 
easily  to  draw  their  effects  out  of  France  and  England  into 
those  countries  in  which  they  had  chosen  to  reside.     But 

S Pothier  de  CJiauge,  note  G. 

4  3  Kent  Comm.,  Lect.  44 ;  Story  on  Bills,  §  6,  note  4. 


4  NEGOTIABLE    INSTRUMENTS.  §  4. 

the  invention  of  it  was  a  little  earlier;  for  the  Jews  w^ere 
banished  out  of  Guienne  in  1287,  and  out  of  England  in 
1290;  and  in  1236  the  use  of  paper  credit  was  introduced 
into  the  Mogul  Empire  in  China,"  ^  There  is  no  certainty 
on  the  subject,  though  it  seems  clear  foreign  bills  were  in 
use  in  the  fourteenth  century,  as  appears  from  a  Venetian 
law  of  that  period ;  and  an  inference  drawn  from  the  statute 

5  Eich.  II,  stat.  1,  chap.  2,  warrants  the  conclusion  that 
foreign  bills  were  introduced  into  this  country  previously  to 
the  year  1381."  ^  And  there  is  reason  to  believe  that  bills 
of  exchange  were  known  in  England  as  early  as  1307,  since 
in  that  year  King  Edward  I  ordered  certain  money  collected 
in  England  for  the  Pope,  not  to  be  remitted  to  him  in  coin 
or  bullion,   but  by  way  of  exchange  (per  viam  Cambii)? 

§  4.  Origin  and  history  of  promissory  notes. —  Promis- 
sory notes  have  as  obscure  an  origin  as  bills  of  ex- 
change. There  is  no  doubt  that  they  were  in  use 
among  the  Romans,  but  they  seem  never  to  have  acquired 
those  negotiable  qualities  which,  now  import  to  them  their 
chief  value  as  instruments  of  commerce.  They  were  in  use 
upon  the  continent  of  Europe  before  their  introduction  into 
England,  where  they  first  came  in  vogue  about  the  middle 
of  the  seventeenth  century,  although  it  lias  been  thought 
that  they  have  a  more  recent  origin. 

It  has  been  a  much  debated  question  whether  or  not  the 
common  law  of  England  recognized  the  negotiability  of 
promissory  notes;  and  most  vigorously  was  the  negative  ad- 
vocated by  Lord  Holt,  who  declared  that  the  effort  to  place 
them  on  the  same  footing  as  bills  of  exchange  "  proceeded 
from  the  obstinacy  and  opinionativeness  of  the  merchants 
who  were  endeavoring  to  set  the  law  of  Lombard  street 
above  the  law  of  Westminster  Hall."  This  controversy  was 
terminated  by  the  passage  of  the  statute  3  and  4  Anne,  chap. 
9  [1705]  (made  perpetual  by  the  statute  7  Anne,  chap.  25), 
which  made  promissory  notes  "  assignable  or  indorsable  over 

0  2  Bl.  Comm.  467. 

eChitty  on  Bills  [*11],  16. 

7  Anderson's  History  of  Commerce,  vol.  I,  361. 


§§  5,  6.  l.'OKEKJX    AM)    IXLANI)     BILLS.  5 

in  tkc  same  manner  as  inland  bills  of  exchange  are,  or  may  be 
according  to  the  custom  of  merchants." 

This  statute  has  been  adopted  in  some  of  the  States  of 
the  United  States,  or  in  its  lieu,  other  statutes  prescribing 
the  criteria  and  conditions  of  negotiability.  By  some  au- 
thorities it  is  contended  that  the  statute  of  Anne  was  only 
declaratory  of  their  then  existing  status,  while  by  others 
the  result  of  Lord  Holt's  reasoning  is  concurred  in.** 

SECTION  II. 

FOREIGN    AND    INLAND    BILLS. 

§  5.  Bills  of  exchange  are  either  foreign  or  inland, —  for- 
eign, when  drawn  in  one  State  or  country,  und  made  pay- 
able in  another  State  or  country;  inland,  when  drawn,  and 
made  payable,  in  the  same  State  or  country.  Inland  bills 
are  of  later  origin  than  foreign  bills,  not  having  been  in 
use  in  England  at  a  much  earher  period  than  the  reign  of 
Charles  II.  Inland  bills,  like  them,  were  at  first  more  re- 
stricted in  their  operation  than  at  present,  for  it  was  deemed 
essential  to  their  validity  that  a  special  custom  for  the  draw- 
ing and  accepting  them  should  exist  between  the  towns  in 
which  the  drawer  and  acceptor  lived;  or  if  they  lived  in  the 
same  town,  that  such  a  custom  should  exist  therein.^  At 
first,  also,  effect  was  only  given  to  the  custom  when  the 
parties  were  merchants,  though  afterward  extended,  as  in 
the  case  of  foreign  bills,  to  all  persons  whether  traders  or 
not.^^ 

§  6.  The  chief  difference  between  foreign  and  inland  bills 
is  this:  that  the  former  must  be  ]irotested  in  order  to  charge 
the  drawer,  while  tlio  latter  iiood  not  be.^^  But  there  are 
other  important  differences  which  will  be  hereafter  con- 
sidered. 

SCaton  V.  Lenox,  o  Rand.  31:  Davis  v.  Miller,  14  Oratt.  18:  First 
Nat.  Bank  v.  Hunt,  25  Mo.  Ai)p.  170. 

oPinkney  v.  Hall,  Ld.  Raym.  175:  Chitty  on  Bills     [*11.  12].  10. 

lOBroniwiek  v.   Lloyd.  2  Lntw.   1585. 

Jl  Daniel  on  Xeirotiable  Instruments,   §   02(5  ct  seq. 


6  ISrEGOTIABLE    INSTKUMEXTS.  §§  T-0. 

§  7.  When  bills  are  deemed  foreign  in  England  and  in  this 
country. —  lu  England,  a  bill  drawn  in  Ireland  and  payable 
in  England  is  deemed  a  foreign  bill/"  but  one  drawn  and 
payable  in  Great  Britain  is  an  inland  bill.^^  For  the  pur- 
poses of  the  law-  of  negotiable  instraments,  the  several 
States  of  the  United  States  are  foreign  to  each  other. ^"^ 

Thus  a  bill  drawm  in  New  York  city,  N.  Y.,  and  payable 
in  Chicago,  111.,  is  a  foreign  bill,  while  one  drawn  in  Phila- 
delphia, Pa.,  and  payable  in  Pittsburg,  in  the  same  State, 
is  an  inland  bill  of  exchange. 

§  8.  Rules  of  decision  of  Federal  courts. —  In  the  courts  of 
the  United  States,  the  decisions  are  sometimes  in  conformity 
with  those  of  the  State  courts  of  last  resort  in  respect  to 
the  liabilities  of  parties  to  bills  and  notes,  but  not  uni- 
formly. Where  any  controversy  arises  as  to  the  liability 
of  a  party  to  a  bill  of  exchange,  promissory  note,  or  other 
negotiable  paper,  in  one  of  the  Federal  courts  of  the  United 
States,  which  is  not  determined  by  the  positive  words  of  a 
State  statute,  or  by  its  meaning  as  construed  by  the  State 
courts,  the  Federal  courts  will  apply  to  its  solution  the  gen- 
eral principles  of  the  law^  merchant,  regardless  of  any  local 
decision.-'^ 

§  9.  The  face  of  the  bill  does  not  always  disclose  its  char- 
acter.—  If  the  bill  does  not  disclose,  on  its  face,  the  place 
where  drawn,  the  omission  may  be  supplied  by  evidence, 
but  the  court  wall  not  take  judicial  cognizance  of  political 
divisions  of  foreign  States,  and  therefore  will  not  conclude 
from  the  fact  that  a  given  city  is  named,  that  the  place 
named  is  situated  in  a  certain  country  or  State.  For  exam- 
ple: it  has  been  held  that  a  bill  dated  "  Dublin,"  the  court, 
without  proof,  will  not  presume  was  dated  at  Dublin,  Ire- 
land,  or  that   a  note   dated  "  Philadelphia,"  w^as  made  in 

12  Mahoney  v.  Aslilin,  2  B.  &  Ad.  478. 
iSAmner  v.  Clark,  2  Ciomp.,  M.  &  R.  408. 

14  Buckner  v.  Finley,  2  Pet.  .580 ;  Armstrong  v.  American  Exch.  Nat. 
Bank,  133  U.  S.  433. 

15  Swift  V.  Tyson,  10  Pet.  1 ;  Railroad  Co.  v.  Nat.  Bank,  102  U.  S.  14. 


§  10.  THE    EFFECT    OF    A    BILL    OF    EXCHANGE.  7 

Pennsylvania,   or   that   a  bill  dated  ''  New    Orleans,"   was 
drawn  in  Louisiana."' 

If  the  instrument,  upon  its  face,  purports  to  be  a  foreign 
bill  (although  actually  drawn  and  payable  in  the  same 
country),  and  innocent  third  parties  take  it  in  the  belief  that 
it  is  what  it  appears  to  be,  the  presumption  that  it  is  foreign 
will  be  conclusive. ^^  As  between  the  original  parties  and 
others  having  notice  of  the  circumstances  under  which  it 
Avas  drawn,  the  question  would  be  doubtful,  although  the 
better  view  seems  to  be  that  it  would  be  even  then  held  to 
be  a  foreign  bill.^^ 

If  a  bill  be  on  its  face  an  inland  bill,  the  fact  that  it 
was  actually  drawn  and  delivered  in  a  foreign  State  will 
not  divest  it  of  its  inland  character.  The  principle  is  that 
it  is  competent  for  the  parties  to  provide,  by  agreement, 
that  it  shall  be  governed  by  the  laws  of  any  particular  State 
or  country. -^^ 

SECTIOX  III. 

THE   EFFECT  OF   A  BILL  OF  EXCHANGE WmEX  IT  IS  AN  ASSIGN- 
MENT,   AND    WaiEN    NOT. 

§  10.  Bills  of  exchange  and  promissory  notes  have 
long  been  exceptions  to  the  rule  of  the  common  law 
that  interdicted  assignments  of  things  in  action.  Courts 
of  equity  have  for  many  years  discredited  the  common  law 
rule,  and  held  valid  the  assignments  of  a  naked  possibility,^ 
and  courts  of  law,  following  in  the  footsteps  of  equity,  now 
recognize  and  enforce  such  assignments  brought  in  the  name 
of  the  assigiior  for  the  benefit  of  the  assignee.'* 

The  effect  of  the  dramng  of  a  bill  of  exchange,  upon  the 

16  Kearney  v.  King,  18  Eng.  C.  L.  28;  Yale  v.  Wood,  30  Tex.  17;  Rig- 
gin  V.  Collier,  6  Mo.  568. 

17  Daniel  on  Negotiable  Instruments,  §  12 ;  Lennig  v.  Ralston,  23  Pa. 
St.   137. 

1*  Daniel  on  Negotiable  Instruments,  §  12;  Parsons  on  Notes  and 
Bills,  57. 

19  Strawbridge  v.  Robinson,  5  Oilman,  472. 

20  3  Leading  Cases  in  Equity  [*G52].  307. 

21  Mandeville  v.  Welch,  5  Wheat.  277 ;  Wheatley  v.  Strobe,  12  Cal. 
98. 


8  NEGOTIABLE    INSTRUMENTS,  §§  11,  12. 

rights  and  interests  of  the  parties  in  the  fund  in  the  hands 
of  the  drawee  —  whether  or  not  it  operates  as  an  assign- 
ment of  the  funds  —  is  always  a  practical,  pertinent  ques- 
tion. 

§  11.  What  is  the  effect,  if  drawn  for  the  whole  amouni 
of  the  fund  in  the  hands  of  the  drawee. —  If  the  bill  is  ac- 
cepted, it  is  generally  held  to  constitute  an  assignment,^ 
but  the  doctrine  that  an  unaccepted  bill  for  the  entire  debt 
or  fund  operates  as  an  equitable  assignment  thereof  is  op- 
posed to  the  current  of  authority  in  the  United  States,  and 
in  England  as  w^ell,  it  being  considered,  that  the  bill  of  ex- 
change is  an  independent  security  resting  on  the  commer- 
cial responsibility  of  the  parties  thereto.^^  But  it  is  con- 
ceded that  the  bill,  w^hether  for  the  whole  of  the  fund  or 
debt,  or  only  a  part,  may  be  evidence  to  show  an  assignment; 
and  that  with  other  circumstances  indicating  that  such  was 
the  intention,  will  vest  in  the  holder  an  exclusive  claim  to 
the  debt  or  fund,  and  bind  it  in  the  hands  of  the  drawee 
after  notice.^  ^^eiy  slight  circumstances  in  addition  to  the 
bill  ought  to  effectuate  an  equitable  assignment;  and  while 
the  current  of  authority  is  undoubtedly  otherwise,  the  bet- 
ter opinion,  as  it  seems  to  us,  is  that  a  bill  for  the  entire 
amount  of  a  debt  or  fund  should  operate  as  an  equitable 
assignment  thereof.  The  doctrine  of  equitable  assignment 
is  the  creature  of  courts  of  equity,  and  the  phrase  ''  equi- 
table assignment  "  is  used  because,  by  the  technicalities  of 
pleadings  at  law,  no  legal  assignment  can  be  effectuated."'' 

^  12.  What  is  the  effect  of  a  nonnegotiable  order  for  the 
whole  of  the  fund. —  It  may  be  regarded  as  a  settled  doc- 
trine, that  an  order  founded  upon  a  good  consideration, 
given  for  a  specific  debt  or  fund  owing  by  or  in  the  hands 

23  Daniel  on  Xegotial>le,  Instruments,  §  18;  Mandeville  v.  Welch.  .5 
Wheat.  277 :   Buckner  v.  Sayre,  17  B.  Monroe,  7.54. 

23  Bank  of  Commerce  v.  Bogy,  44  Mo.  15;  Gramnel  v.  Carmer.  ").5 
Mich.  201. 

24Fir.st  Nat.  Bank  v.  Dubuque  S.  R.  Co.,  52  Iowa,  378;  Bank  of 
Commerce  v.   Bogy,  44  Mo.    17. 

25  Daniel  on  Negotiable  Instruments,  §  20;  First  Nat.  Bank  v.  Coates, 
8  Fed.  540. 


§  13.  THE    EFFECT    OF    A    BILL    OF    EXCnANGE.  9 

of  a  third  person,  operates  as,  or  rather  is  evidence  <.f,  tin 
efputablo  assignment  of  the  demand  to  the  holder.^"  It  is 
clearly  an  assignment,  as  between  the  drawer  and  the  payee, 
because  so  intended.-'^  It  is  equally  so  as  between  them  and 
the  drawee,  as  soon  as  it  is  presented  to  him  and  he  as- 
sents,^**  and  whether  he  assents  or  not,  the  holder  may,  in 
equity,  recover  the  debt  or  fund  from  hiuL'^ 

§  13.  What  is  the  effect  of  a  bill  of  exchange  or  nonnego- 
tiable  order  for  part  of  a  fund. —  The  doctrine  is  laid  down 
with  emphasis  by  many  authorities  that  an  order  or  a  bill 
drawn  for  part  of  a  fund  does  not  operate  as  an  assignment 
of  that  part,  or  give  a  lien  as  against  the  drawee,  unless  he 
consents  to  the  appropriation  by  an  acceptance  of  the  draft. 
Mr.  Justice  Story,  delivering  the  opinion  of  the  United 
States  Supreme  Court  and  speaking  of  the  rights  of  the 
debtor,  said:  "  He  has  a  right  to  stand  upon  the  singleness 
of  his  original  contract,  and  to  decline  any  legal  or  equitable 
assignments  by  which  it  may  be  broken  into  fragments. 
AVlien  he  undertakes  to  pay  an  integral  sum  to  his  creditor, 
it  is  no  part  of  his  contract  that  he  shall  be  obliged  to  pay 
in  fragments  to  any  other  persons.  So  that,  if  the  plaintiff 
could  show  a  partial  assignment  to  the  extent  of  the  bills, 
it  would  not  avail  him  in  support  of  the  present  suit."  ^" 

This  doctrine  is  correct  in  so  far  as  it  applies  to  legal 
assignments.  But  it  has  been  held  in  numerous  cases,  and, 
we  think,  should  now  be  regarded  as  law,  that  a  nonnego- 
tiable  order  for  part  of  a  fund  operates  as  an  equitable  as- 
signment pro  tanlo.^^  Clearly  this  is  the  case  wdien  it  ha? 
been  accepted  or  assented  to  l»y  the  drawee.^^     And  when 

SOMandeville  v.  Welch.  5  Wheat.  277:  Anderson  v.  De  Soor,  G  Gratt. 
.3G4;  Parker  v.  City  of  Syracuse.  31  N.  Y.  .379. 

27:\[orton  V.  Noylar.  1  Hill  (N.  Y.)  583;  Gardner  v.  Xat.  City  Bank. 
39  Ohio  St.  604. 

28  Johnson  v.  Thayer,  17  Mo.  403:    Descsse  v.  Xapior,  1   :\I(Cord.  IOC. 

Sii  Story's   Eq.   Jur..    §    1044. 

SOMandeville  v.  Welch.  .')  Wlioat.  277:  Oraninol  v.  Carnier.  .').')  :Mi.h. 
201;  Cowperthwaite  v.  Sheffield,  1  Sandf.  410. 

31  Christmas  v.  Russell.  14  Wall.  84;  Pope  v.  Huth,  14  Cal.  407. 

32Vreeland  v.  Blunt,  G  Barb.  182;  Cutts  v.  Perkins,  12  Mass.  200. 


10  NEGOTIABLE    INSTKUMENTS.  §  14. 

it  lias  not  been  accepted,  oiu-  own  view  is  this:  that  a  non- 
negotiable  order  for  part  of  a  fund  does  operate  as  an 
equitable  assignment  pro  tanto  as  between  the  drawer  and 
payee,  because  obviously  so  intended.  And  if  the  payee  or 
indorsee  goes  into  equity,  or  the  parties  are  brought  therein 
by  any  proceeding,  so  that  all  of  them  are  before  the  court, 
the  holder  of  the  order  may  enforce  it  as  an  equitable  as- 
signment as  against  all  subsequent  claimants,  whether  by 
assignment  from  the  drawer,  or  by  legal  process  served  upon 
the  drawee.^^ 

§  14.  In  Xew  York  there  have  been  numerous  cases  in- 
volving the  questions  under  consideration,  and  there  the 
doctrine  obtains  that  a  bill  or  check  payable  generally,  does 
not  operate  as  an  assignment  of  the  part  of  the  fund  for 
which  it  is  draw^n,  unless  assented  to  by  the  drawee  ;^^  but 
that  an  order  for  part  of  a  specified  fund  then  due  or  to 
become  due  operates  as  an  assignment,  and  that  the  drawee 
may  be  compelled  by  action  to  apply  the  fund  as  directed, 
after  notice  of  the  assignment.^^  In  that  State  the  rules  of 
practice  are  such  that  the  same  effect  is  given  to  the  partial 
order  at  law  as  in  equity;  and  hence  we  do  not  observe  in 
the  decisions  of  its  courts  the  distinctions  generally  taken 
between  legal  and  equitable  assignments.^^ 

33  Daniel  on  Negotiable  Instruments,  §  23 ;  3  Leading  Cases  in  Equity, 
356;  Pease  v.  Landauer,  63  Wis.  20. 

34  Attorney-General  v.  Continental  Life  Ins.  Co.,  71  N.  Y.  325;  Throop 
Orain  Cleaner  Co.  v.  Smith,  110  N.  Y.  90. 

35Ehrichs  v.  De  Mill,  75  K  Y.  370;   Brill  v.  Tuttle,  81  N.  Y.  457. 
3G  Morton  v.  Naylor,  1  Hill,  583. 


CHAPTER  II. 

DIFFERENT  KINDS  OF  NEGOTIABLE  INSTRUMENTS. 


SECTION  I. 


DEFINITIONS    OF    BILLS    OF    EXCHANGE    AND    PEOMISSORY    NOTES, 
AND    THE    DIFFERENCES    BETWEEN    THEM. 

§  15.  Bills  of  exchange. —  A  bill  of  exchange  is  an  open 
letter  addressed  by  one  person  to  a  second,  directing  him, 
in  effect,  to  pay  absolutely,  and  at  all  events,  a  certain  sum 
of  money  therein  named,  to  a  third  person  or  to  any  other 
to  whom  that  third  person  may  order  it  to  be  paid;  or  it 
may  be  payable  to  bearer  or  to  the  drawer  himself.^ 

The  person  who  draws  is  called  the  drawer,  the  one  on 
whom  drawn,  the  drawee,  and  to  whom  payable,  the  payee. 

§  16.  Promissory  notes. —  A  promissory  note  is  an  open 
promise  in  writing  by  one  person  to  pay  to  the  order  of 
another  therein  named,  or  to  bearer,  a  specified  sum  of 
money  absolutely  and  at  all  events."  The  person  who  makes 
the  note  is  called  the  maker,  and  the  one  to  whom  the 
promise  is  made,  the  payee. 

The  term  "  holder  "  is  a  general  word  applied  to  anyone 
in  actual  or  constructive  possession  of  the  bill  or  note,  and 
entitled  in  law  to  recover  or  receive  its  contents  from  the 
parties  to  it. 

§  17.  Difference  between  bills  and  notes. —  In  their  original 
structure,  a  bill  of  exchange  and  a  promissory  note  do  not 
strongly  resemble  each  other.  In  a  bill,  there  are  three 
original  parties:  drawer,  drawee,  and  payee;  in  a  note  only 
two:  maker  and  payee.    In  a  bill  the  acceptor  is  the  primary 

1  For  various  definitions  of  a  bill  of  exchange  and  a  promissory  note, 
*ee  Daniel  on  Negotiable  Instruments.  §  27,  note. 

2  Dobbins  v.  Oberman,  17  Xeb.  Ifi;!;  Daniel  on  Negotiable  Instruments. 
§  28. 

[111 


12     difi'ekk>;t  ki.nds  of  xegotiable  ixstkumea'ts.    §  IS. 

debtor.  In  a  note  the  maker  is  the  only  debtor.  But  if  the 
note  be  transferred  to  a  third  party  by  the  payee,  it  becomes 
strikingly  similar  to  a  bill.  The  iudorser  becomes  then,  as 
it  were,  the  drawer;  the  maker,  the  acceptor;  and  the  in- 
dorsee, the  payee.^ 

SECTION  II. 

COUPON    BONDS, 

§  18.  Coupon  bonds  are  issued  by  the  Federal  Govern- 
ment, by  the  States,  by  territorial  governments  or  local 
divisions  thereof,  by  municipalities,  by  railroad,  canal,  and 
steamboat  companies,  and  all  manner  of  trading  corpora- 
tions. A  vast  portion  of  the  wealth  of  the  country  is  repre- 
sented ill  "  coupon  bonds,"  and  the  subject  is  one  of  grow- 
ing im]K)rtaiice. 

§  19.  Description  of  coupon  bonds. —  A  coupon  bond  is  an  ■ 
instrument  complete  in  itself,  and  yet  composed  of  several 
distinct  instruments,  each  of  which  is  in  itself  as  complete 
as  the  whole  together.  As  originally  issued,  the  "  coupon 
bond  "  consists  of  (1)  an  obligation  to  pay  a  certain  amount 
of  money  at  a  future  day;  and  (2)  annexed  to  it  is  a  series 
of  coupons,  each  one  of  which  is  a  promise  for  the  payment 
of  a  periodical  instalment  of  interest.  The  contract  be- 
tween the  payor  and  the  holder  is  contained  in  the  bond, 
but  the  coupons  are  furnished  as  convenient  instruments 
to  enable  the  holder  to  collect  interest  without  presenting 
the  bond,  by  separating  and  presenting  the  proper  coupon; 
and  it  also  enables  him  to  anticipate  his  interest  by  nego- 
tiating the  coupon  which  represents  it,  to  another  person, 
at  any  tunc  before  its  maturity.^ 

§  20.  The  term  "  coupon  "  is  derived  from  the  French 
''  coujjer,''  meaning  "  to  cut,"  and  has  been  well  defined  to 
be  "  one  of  the  interest  certificates  attached  to  transferable 
bonds,  and  of  which  there  are  usually  as  many  as  there  are 
payments  to  be  made  —  so  called,  because  it  is  cut  off  when 

3  Daniel  on  Negotiable  Instruments,  §  29. 

4  Daniel   on  NegotiaVjle  Instruments,   §    1488. 


§§  21,  22.  COL'I'ON     IJO.ND.S.  13 

it  is  presented  for  payment.  They  may  be  severed  and 
negotiated  before  maturity  of  the  interest  they  represent, 
and  thus  pass  as  separate  and  independent  negotiable  instni- 
ments."  Coupons  are  substantially  a  minute  repetition  of 
what  is  contained  in  more  elaborate  terms  in  the  bond  it- 
self. They  are  more  closely  assimilated  to  promissory 
notes  than  to  bank  notes,  bills  of  exchange,  or  checks,  al- 
though in  their  fonnal  wording  they  may  sometimes  less 
resemble  them.'^ 

§  21.  Negotiability  of  coupon  bonds. —  Since  the  seal  does 
not  affect  the  negotiabilily  of  such  securities  issued  by  cor- 
porations and  States,  there  is  no  reason  why  the  same  prin- 
ciple should  not  be  extended  to  them  when  issued  by  indi- 
viduals. As  a  general  rule  a  bond  is  a  sealed  instrument, 
but  it  does  not  follow  that  it  always  is  or  must  be.  AVhile 
it  is  usual  that  such  instruments  are  authenticated  by  a 
corporate  seal,  the  old  idea  that  States  and  corporations  can 
only  bind  themselves  under  seal  is  utterly  obsolete. 

There  no  longer  remains  a  shadow  of  doubt  that  the 
coupon  bonds  of  the  United  States,  of  the  several  States, 
and  of  municipal  and  other  corporations,  when  expressed  in 
negotiable  words,  are  as  negotiable  to  all  intents  and  pur- 
poses as  bills  of  exchange  or  promissory  notes.* 

§  22.  Municipal  bonds. —  If  the  bonds  are  issued  by  a  mu- 
nicipal or  public  coi-poration,  the  purpose  must  be  a  public 
one.  In  the  United  States  the  following  propositions  are 
sustained  by  the  weight  of  authority: 

1.  That  wdienever  a  municipal  coi*poration  has  power  con- 
ferred to  contract  a  debt,  borrow  money,  or  issue  a  nego- 
tiable security,  it  is  to  be  regarded  quoad  hoc  as  a  private 
corporation. 

2.  That  a  municipal  corporation  has  implied  power  to 
contract  a  debt  whenever  necessary  to  carri'  out  any  power 
conferred  upon  it. 


5  Daniel  on  Negotiable  Instruments,  §§  1489,  1490. 
c  Daniel  on  Negotiable  Instruments,  §  1500;  Morgan  v.  United  States, 
113  U.  S.  491. 


li       DIFFERENT  KINDS  OF  NEGOTIABLE  INSTRUMENTS,       §  23. 

3.  That  whenever  it  may  contract  a  debt,  it  may  borrow 
money  to  pay  it. 

4.  That  whenever  it  may  contract  a  debt  or  borrow 
money,  it  may  issue  its  negotiable  coupon  bonds  for  its 
payment.^ 

§  23.  As  to  what  purposes  are  public. —  The  construction 
anil  grading  of  streets;^  the  construction  of  waterworks;" 
of  a  bridge;^"  of  a  town  hall;^^  gas  works ;^^  markets ;^^  the 
providing  of  lire  engines;^'*  the  laying  out  of  cemeteries,^^ 
are  proper  objects  of  municipal  care,  and  undoubtedly  the 
Legislature  may  authorize  the  municipality  to  contract  with 
reference  to  them,  to  borrow  money  for  the  purpose  of 
effecting  those  objects,  and  to  issue  its  negotiable  securi- 
ties therefor. ^^  But  the  loaning  of  money  to  enable  citizens 
to  rebuild  their  burned  houses,^^  to  equip  and  furnish  manu- 
facturing establishments  of  individuals,^*  to  construct  saw 
or  grist  mills^^  (unless  such  mills  be  made  public  institu- 
tions, in  which  case  it  would  be  different^),  to  improve  a 
water  privilege  and  manufacture  lumber,^^  to  establish  a 
citizen  in  business,^  to  provide  destitute  citizens  with  pro- 
visions and  grain  for  seed  and  feed,^^  would  not  be  ^\^thin 
the  scope  of  public  purposes,  and  the  Legislature  could  con- 
fer no  authority  to  subscribe  to  such  objects. 

7  Daniel   on  Negotiable  Instruments,  §   1527ct. 

8  Rogers  v.  Burlington,  3  Wall.  362. 
»  Hale  V.  Houghton,  8  Mich.  458. 

10  Commissioners  v.  Chandler,  90  U.  S.  205;  United  States  v.  Dodge 
County,  110  U.  S.  156. 

11  Greeley  v.  People,  60  111.   19. 

12  City  of  Aurora  v.  West,  9  Ind.  74. 

13  State  V.  Madison,  7  Wis.  688. 

14  Robinson  v.   St.  Louis,  28  Mo.  488. 

15  Mills  V.  Gleason,  11  Wis.  470;  Robinson  v.  St.  Louis,  28  Mo.  488. 

16  1   Dillon  on  Municipal   Corporations,  §  66. 
17 Lowell  V.  Boston,   111   Mass.  454. 

18  Loan  Assn.  v.  Topeka,  20  Wall.  655. 

19  Osborne  v.  Adams  County,  109  U.  S.  1. 

20  Township  of  Burlington  v.   Beasley,  94  U.  S.  314. 

21  Weismer  v.  Village  of  Douglass,  4  Hun,  211. 

22  Cooley  on  Constitutional   Limitations,  494. 

23  State  ex  rel.  GriflBth  v.  Osawkoe  Township,  14  Kan.  418. 


§§  24,  25.  liA.NK    .NOTKS.  15 

Whetlicr  or  not  the  construcliou  of  a  railroad  or  other 
highway  is  a  pul)lic  piui)ose  to  wliich  a  inuiiicipal  corpora- 
tion may  be  autliorized  to  contribute  is  a  much  debated 
question.  The  Supreme  Court  of  the  United  States,  in 
numerous  decisions,  has  affirmed  that  it  is,  and  so  likewise 
have  many  of  the  State  courts  of  last  resort.''* 

SECTIOX  III. 

BANK    XOTES. 

§  24.  Bank  notes  or  bank  bills  (as  they  are  equally  as 
often  called)  are  the  promissory  notes  of  incorporated  banks, 
designed  to  circulate  like  money,  and  payable  to  bearer  on 
demand. 

The  temis  "  bank  notes  "  and  "  bank  bills  "  are  of  the  like 
signification,  and  for  the  purposes  of  interpretation,  both 
in  criminal  and  civil  jurisprudence,  are  equivalent  and  inter- 
changeable. 

In  form  and  substance  they  are  promissory  notes,  and 
they  are  governed  by  very  many  of  the  ])rinci|)les  which 
apply  to  the  negotiable  notes  of  individuals  given  in  the 
course  of  trade.  But  they  are  designed  to  constitute  a  cir- 
culating medium,  and  this  circumstance  imparts  to  them 
peculiar  characteristics,  and  essentially  varies  the  rules 
which  govern  promissory  notes  in  general.  They  have  been 
lield  not  securities  for  money,  but  money  itself.^ 

§  25.  Chief  characteristics  of —  Bank  bills  are  (1)  always 
payable  on  demand;-"  (2)  usually  payable  to  bearer,  though 
sometimes  expressed  to  be  payable  to  a  person  named  or 
bearer ;^^  (3)  a  lawful  tender  in  payment  of  debts,  unless 
objected  to  because  they  are  not  monev.^ 


24  Railroad  Co.  v.  County  of  Otoe,  16  Wall.  667;  Harter  v.  Kcrnochan, 
103  U.  S.  508;  Knox  County  v.  Aspinwall,  21  How.  539;  Daniel  on 
Negotiable  Instruments,   §   1523  and  oases  cited  in  note. 

25  Southcot  V.  Watson,  3  Atk.  22G ;  Daniel  on  Negotiable  Instrti- 
nients,  §   1064. 

2<5  Daniel  on  Negotiable  Instruments,  §  1666. 
2"  Daniel  on  Negotiable  Instruments,  §  1665. 
2S  Daniel  on  Negotiable  Instruments,  §  lG72a. 


IG       DIFFEKE.NT   KINDS  OF  NEGOTIABLE   INSTRUMENTS.       §  26. 

Bank  notes  are  not,  legally  speaking,  money,  but  in  a 
popular  sense  are  often  spoken  of  as  money,  and  are  con- 
ventionally used  in  its  stead  with  the  like  effect.^ 

SECTION  IV. 

CEKTIFICATES    OF    DEPOSIT. 

§  26.  Definition. —  A  certificate  of  deposit  is  a  receipt  of 
a  bank  or  banker  for  a  certain  sum  of  money  received  upon 
deposit,  and  it  is  generally  framed  in  such  a  form  as  to 
constitute  a  promissory  note,  payable  to  the  depositor,  or  to 
the  depositor  or  order,  or  to  bearer. 

It  appears  to  have  been  at  an  early  day  the  practice  of 
the  goldsmiths  in  England,  who  generally  engaged  in  the 
business  of  banking,  to  give  receipts  to  their  customers  for 
moneys  deposited  with  them,  in  the  form  of  promissory 
notes  payable  to  the  bearer  on  demand,  or  to  the  depositor 
or  order.^*^  And  the  statute  of  Anne  placed  them,  as  other 
promissory  notes,  on  the  same  footing  as  bills  of  exchange.^^ 
Thus  originated  the  instrument  now  so  commonly  used,  and 
called  a  certificate  of  deposit,  which  is,  in  short,  generally 
a  promissory  note  for  the  payment  of  an  amount  which  it 
certifies  to  be  deposited  in  bank. 

§  27.  Negotiability  of. —  It  was  once  questioned  whether 
or  not  certificates  of  deposit  are  negotiable,  but  there  is  now 
no  doubt  that  they  are,  where  expressed  in  negotiable  words. 
This  view  has  been  adopted  by  the  Supreme  Court  of  the 
United  States.22 

In  order,  however,  to  be  negotiable,  a  certificate  of  de- 
posit must  possess  the  requisite  features  of  certainty  in 
respect  to  parties,  and  time  and  mode  of  payment;  and  the 
same  causes  which  deprive  bills  and  notes  of  negotiability 
would  affect  it  in  like  manner.     Thus,  if  payable  "  in  cur- 

20  Daniel  on  Negotiable  Instruments,  §   1G72. 

■to  Nicholson  V.  Sedgwick,  1  Ld.  Eaymond,  180;  Chitty  on  Bills  [*.522], 
.501. 

31  .3  and  4  Anno,  chap.   9. 

32  Miller  v.  Austin,  13  How.  218. 


S  28.  CHECKS. 


17 


reiicv,"  it  would  nnt  lie  iiogotiaLlc  according  to  tlic  prin- 
ciples which  prevail  as  to  lulls  and  notes ;'*''  though  it  has 
been  held  otherwise.''"^  So  if  i)ayable  in  "  United  States  six 
per  cent,  interest-bearing  bonds,"  it  is  a  mere  contract  to 
deliver  such  bonds,  and  not  negotiable.^^ 

SECTTOX  V. 

CHECKS. 

§  28.  A  check  is  (1)  a  draft  or  order  (2)  upon  a  bank  or 
banking  house,  (:})  puri)orting  to  be  drawn  upon  a  deposit 
of  funds  (4)  for  the  payment  at  all  events  of  a  certain  sum 
of  money,  (5)  to  a  certain  person  therein  named,  or  to 
him  or  his  order,  or  to  bearer,  and  (6)  payable  instantly  on 
demand.     This  definition  has  been  approvingly  quoted.^ 

The  Supreme  Court  of  the  United  States,  in  the  leading 
ease  of  .Merchants  Bank  v.  State  Bank,  says  of  checks  when 
contrasted  with  bills  of  exchange:  "Bank  checks  are  not 
inland  bills  of  exchange,  but  have  many  of  the  ]n-operties 
of  such  commercial  paper,  and  many  of  the  rules  of  the  law 
merchant  are  alike  applicable  to  both.  Kach  is  for  a  specified 
sum,  ])ayable  in  money  —  in  both  cases,  there  is  a  drawer, 
a  drawee,  and  payee.  Without  acceptance,  no  action  can  be 
maintained  by  the  holder,  upon  either,  against  drawee.  The 
chief  points  of  difference  are  that  (1)  a  check  is  always 
drawn  on  a  bank  or  banker;  (2)  the  drawer  is  not  discharged 
by  the  laches  of  the  holder  in  presentment,  nnless  he  can 
show  that  he  has  sustained  some  injury  by  the  default;  (4) 
it  is  not  due  nntil  payment  is  demanded,  and  the  statute  of 
limitations  runs  only  from  that  time;  (5)  it  is,  by  its  face, 
the  appropriation  of  so  much  money  of  the  drawer,  in  the 
hands  of  the  drawee,  to  the  payment  of  an  admitted  liability 
of  the  drawer;  (6)  it  is  not  necessary  that  the  drawer  of  a 

sailuse  V.  Hamblm,  29  Iowa,  501:  Lindsay  v.  McClelland,  18  Wis. 
4S1. 

^4  Pardee  v.  Fish.  00  X.   Y.  20.-):    Drake  v.  :Marklo.  21   Ind.  433. 

•"-r'Easton  v.  Hyde.  13  Minn.   90. 

30  Blair  &  Tloge  v.  Wilson,  28  Gratt.  170;  Ridgely  Bank  v.  Patton. 
100   111.   484. 

2 


18       1>IFFERE^-T   KINDS  OF   IS'EGOTIAULE  IXSTEUMENTS.        §  2D. 

hill  Aiowld  have  fuiuls  in  the  haiuU  of  the  drawee  —  a  check 
in  such  case  would  be  a  fraud."  ^' 

§  29.  (1)  A  check  is  a  draft  or  order. —  A  bill  is  also  a 
draft  or  order;  and  it  is  often  said  that  a  check  is,  iu 
legal  elfect,  a  bill  of  exchange  drawn  on  a  bank  or  bank- 
ing house,  with  some  peculiarities.^^  In  some  cases  it  is 
called  a  bill  payable  on  demand,^'-^  and  in  others  an  in- 
land bill,  or  in  the  nature  of  an  inland  bill,  payable  on  de- 
mand;"*" and  the  expression  that  a  check  is  "  like  a  bill  "  has 
been  criticized  on  the  groiyid  that  "  nihil  simile  est  idem,'' 
whereas  "checks  are  bills,  or  rather  bill  is  the  genus,  and 
check  is  a  species."  ^^  In  form  a  check  is  a  bill  on  a  bank- 
ing house,  and  it  is  perfectly  correct  to  say  that  it  is  a  bill 
with  some  peculiarities,  or  in  other  words,  a  species  of  bill 
of  exchange. 

§  30.  (2)  It  is  absolutely  necessary  that  the  draft,  in  order 
to  be  a  check,  should  be  drawn  upon  a  bank  or  banker. — 
Upon  this  jioint  the  authorities  are  agreed. ^^  A  bill  may 
also  be  drawn  upon  a  banker;  and,  tlierefore,  while  it  is 
necessary  that  a  check  should  be  so  drawn,  that  alone  does 
not  distinguish  it.  It  does  not  seem  necessary  that  the 
drawee,  when  an  individual,  should  ])e  described  as  a  banker; 
and  an  order  addressed  simply  to  "  Messrs.  A.  &  B.,"  has 
been  lield  a  check,  it  being  proved  that  they  were  bankers,^^ 
although  on  sound  principle  it  would  seem  that  the  instru- 
ment sliould  not  be  so  considered  unless  its  face  showed  that 
it  was  drawn  on  a  banking  house. 

§  31.  (3)  A  check  purports  to  be  drawn  upon  a  deposit. — 
It    is   frequently    said    a    clieck    is    drawn    upon    a    deposit 

37  Mprchants'  Bank  v.  State  Bank.   10  Wall.  647. 

-"  Billjjerry  v.  Branch,  in  Oratt.  418;  Cruger  v.  Armstrong,  .3  Johns. 
Can.  .5;   State  v.  Crawford.  1.3  La.  Ann.  301. 

39Harker   v.   Andpr^on.  21    Wond.   372:    Edwards   oti  Bills,   396. 

40  Merchants'  Bank  v.  Spicer.  6  Wend.  44.5;  Pnrcell  v.  Allemong,  22 
Gratt.   742. 

41  Matter  of  Bro\^'n,  2  Story,  .502. 

42  Espy  V.  Bank  of  Cincinnati,  IS  Wall.  620;  Bowen  v.  Newell,  8 
X.  Y.  19.5;  Xorthwcstern  Coal  Co.  v.  Bowman,  69  Iowa,  152. 

4.T  Planters'  Bank  v.  Kcsee,   7  Heisk.   200. 


g  ;}2.  CHECKS.  1"J 

ill  the  banker's  liauds;"  ami  the  faet  that  it  is  a*) 
drawn  has  been  held  necessary  to  constitute  the  draft  a 
check/''  But  this  cannot  be  the  True  criterion.  It  is  not 
the  fact  that  the  order  is  actually  drawn  on  a  deposit,  but 
the  fact  that  it  purports  to  be  so  drawn,  which  constitutes 
it  a  check;  and  it  is  more  accurate  to  say  that  it  is  upon  its 
face  a  draft  upon  a  deposit.'*"  To  hold  otherwise  would  au- 
thorize the  construction  of  a  written  contract  by  the  light 
of  an  extraneous  fact  of  which  the  holder  had  no  notice. 
If  there  were  no  deposit,  it  would  bo  a  fraudulent  check  — 
but  a  check,  nevertheless  —  and  we  cannot  conceive  of  a 
wider  departure  from  principle  than  to  hold  that  the  fraud 
varied  the  nature  of  the  instrument  itself.^' 

In  the  case  of  Merchants'  Bank  v.  State  Bank,  to  which 
reference  has  already  been  made,  a  contrary  principle  was 
announced,  but,  for  the  reasons  herein  assigned,  the  de- 
cision in  this  particular  does  not  seem  to  be  consonant  with 
correct  principle. 

§  32.  (4)  A  check  must  be  for  the  payment  at  all  events 
of  a  certain  sum  of  money. —  lu  this  respect  it  does  not 
differ  from  other  negotiable  instruineuts;  and  though,  per- 
liaps,  it  might  still  be  termed  a  check,  although  not  pay- 
able in  money,  by  which  is  meant  the  legal  tender  currency 
of  the  country,  it  %vould  certainly  not  be  negotiable  if  ex- 
pressed to  be  payable  "  in  bank  lulls  "  or  *'  in  currency,"  ■*'- 
or  if  it  lacked  words  of  negotiability,'*^  or  were  deficient  in 
any  of  the  characteristics  in  respect  to  certainty  in  fact 
and  time  of  pavment  and  party  to  whom  ]iayment  is  to  be 
made."*' 

•*•*  ^Morrison  v.  Bailey,  5  Ohio  St.  13;  Espy  v.  Bank  of  Cincinnati,  18 
Wall.  620. 

■f">  Planters'  Bank  v.  Kesee.  7  Ileisk.  200. 

^*"' Chain])ion  v.  Cordon,  70  Pa.  St.  476;  Deener  v.  Brown,  1  Mac- 
Arthur,   3.50. 

■17  Merchants'   Bank  v.  State  Bank,    10  Wall.  (i47. 

48  Bank  of  Mobile  v.  Brunn,  42  Ala.  108;  Little  v.  Phoenix  Bank,  2 
Hill    (N.  Y.)    425. 

■«!>  Partridge  v.  Bank  of  Enjrland,  0  Q.  B.  .396. 

f'O  Daniel   on   Xecrotiable   Instrunicnis.    t;    l.'iTO. 


20        DlFFEREJsT   KIXDS   OF   XECiOTIAliLK    1  .XSTKl' .M  KXTS.         g  33. 

g  33.  (5)  A  check  is  payable  to  a  certain  person  therein 
named,  or  to  liim  or  his  order,  or  to  bearer. — There  is  no 
common  law  obligation,  according  to  the  English  au- 
thorities, upon  a  bank  to  pay  checks  other  than  those  pay- 
able to  bearer,  it  being  considered  that  the  bank  has  a  right 
to  require  that  it  should  not  run  the  risk  of  mistaking  the 
signature  of  the  party  to  whose  order  it  is  payable,  and 
thus  becoming  responsible  in  the  event  of  its  turning  out  to 
bo  a  forgery  ;^^  and  this  has  led  some  text  writers  and 
judges  to  declare  that  a  check  must  be  payable  to  bearer. ^^ 
But  the  custom  of  banks  for  years  (and  it  prevails  every- 
where, certainly  in  this  country)  is  to  pay  checks  drawn 
payable  to  order,  and  as  to  the  law  in  the  United  States,  it 
has  been  properly  said  that  the  opposite  doctrine  "  is  un- 
supported either  by  reason  or  authority."  ^'^ 

§  34.  (6)  A  check  is  payable  instantly  on  demand. — 
This  is,  as  we  conceive,  the  touchstone  by  which  a  check 
is  tested.^'*  Usually,  no  time  of  jDayment  is  expressed  upon 
its  face,  but  all  commercial  instruments  in  which  no  time  of 
payment  is  expressed  are  understood  to  be,  and  impliedly 
are,  payable  on  demand;  and  when  so  payable  by  implication, 
or  in  express  terms,  they  are  payable  instantly,  without  the 
allowance  of  grace,  which  pertains  to  those  payable  on  a 
particular  day.^^  The  whole  theory  and  use  of  a  check  points 
to  its  immediate  payability  as  its  distinguishing  feature,  and 
its  name  imports  it.  A  person  deposits  money  with  his  bank 
or  banker,  where  it  is  subject  at  any  time  to  his  order.  By 
an  order  he  appropriates  so  much  of  it  to  another  person, 
and  the  bank  or  banker,  in  consideration  of  its  temporary 

f>i  Bellamy  v.  Majoribanks,  8  En^.  L.  &  Eq.  519. 

52Byles  on  Bills  [*1.3],  84  (Sharswood's  ed.)  ;  Chitty  on  Bills  [*5n], 
578;   Woodruff  v.  Merchants'  Bank,  25  Wend.  G72. 

53  Dodge  V.  National   Exoh.  Bank,  ,30  Ohio  St.   8. 

54  Harrison  v.  Nicollet  Nat.  Bank,  41  IMinn.  488:  Merchants'  Nat. 
Bank  v.  Ritzinger,  118  111.  486;  Georgia  Nat.  Bank  v.  Henderson,  46 
Ga.  496;  Northwestern  Coal  Co.  v.  Bowman,  69  Iowa,  152;  Daniel  on 
Negotiable  Instruments,  §   1572. 

55  Daniel  on  Negotiable  Instruments,  §  617;  Merchants'  Bank  V. 
State  Bank,  10  Wall.  647. 


3G.  CHECKS. 


21 


use  of  ihc  iiiouey,  agrees  to  pay  it  in  whole,  or  in  ])arcels, 
to  the  depositor's  order  when  demanded.^''  But  he  does  not 
agree  to  contract  to  pay  at  a  future  day  by  acceptance,  and 
the  depositor  cannot  require  it.  It  follows  that  a  check  is 
not  ciitillcil  to  grace.^'  And  the  ])reponderance  of  authority 
sustains  the  \aew  that  if  the  instnunent  is  not  immediately 
payable,  it  is  classed  as  a  bill  of  exchange."** 

§  35.  Certification  of  checks. —  The  holder  has  no  right  to 
demand  from  the  bank  anything  but  payment  of  the  check. 
And  the  bank  has  no  right,  as  against  the  drawer,  to  do 
anything  else  but  pay  it.  Consequently  there  is  no  such 
thing  as  acceptance  of  checks  in  the  ordinary  sense  of  the 
term.  For  acceptance  ordinarily  implies  that  the  drawer 
requests  the  drawee  to  pay  the  amount  at  a  future  day,  and 
the  drawee  "■  accepts  "  to  do  so,  thereby  becoming  the  prin- 
cipal debtor,  and  the  drawer  being  his  surety.  But  still,  by 
consent  of  the  holder,  the  bank  may  enter  into  an  engage- 
ment quite  similar  to  that  of  acceptance,  by  certifying  the 
check  to  lie  "  good  "  instead  of  paying  it.^^ 

§  36.  Effect  of  certification By   certifying    a    check    (1) 

the  l)ank  becomes  the  prinei])al  and  only  debtor;  (2)  the 
holder  by  taking  a  certificate  of  the  check  from  the  bank, 
instead  of  requiring  payment,  discharges  the  drawer;**  (3) 
and  the  check  then  circulates  as  the  representative  of  so 
much  cash  in  bank,  payable  on  demand  to  the  holder.  Such 
in  brief  is  the  effect  of  the  certification  of  a  check.  It  has 
been  said  to  be,  and  obviously  is,  "  equivalent  to  accept- 
ance "  ^^  in  respect  to  the  obligation  it  creates  upon  a  bank; 

!>*> Goodwin  v.  Aiiu'vican  Xat.  Bank,  4S  Conn.  o.jO;  Daniel  mi  Xcjio- 
tiablo  Instruments,    §    1572. 

57:Morse  on  Banking,  243;  2  Parsons  on  Notes  and  Bills.  OS,  09; 
Daniel  on  Negotiable  Instnnnents.  §   1.)7.j. 

•"s  Harrison  v.  Nicollet  Nat.  Bank,  41  ^Minn.  488:  Bowen  v.  Newell, 
5  Sandf.   (N.  Y.)    320;  Daniel  on  Negotiable  Instriunents.  §  1.574. 

59  Daniel  on  Negotiable  Instruments,  §    1001. 

60  Boyd  V.  Nasmith,  17  Ont.  42.  citing  Daniel  on  Negotiable  Instru- 
ments,   §    IGOlo. 

«l  Merchants'  Bank  v.  State  Bank.   10  Wall.  047. 


22       DIFFERENT   Kl.NDS  OF   AEUOTIABLE    l.NtjTliUMEXTS.        §  37. 

but  it  would  be  confouuding  terms  to  regard  it  as  altogether 
the  same  thing  in  its  eflect  upon  the  relations  of  the  parties. 
The  ccrtihcation  by  a  bank  of  an  acceptance  made  pay- 
able at  its  counter  by  one  of  its  customers,  has  the  same 
effect  and  imports  the  same  obligation  on  the  part  of  the 
hank  as  the  like  certification  of  a  check  drawn  upon  it.^" 
It  is  a  short-hand  certificate  of  deposit.''" 

§  37.  Holder  taking  certified  check  discharges  drawer. — 
The  holder,  by  taking  a  certificate  of  the  check  instead  of 
payment,  discharges  the  drawer.  This  results  from  what 
lias  been  already  said.  If  the  bank  refuses  payment,  the 
drawer  should  be  notified.  But  if  the  holder  receives  some- 
thing else  in  lieu  of  payment,  it  is  the  same  as  payment; 
and  as  the  drawer  cannot  legally  withdraw  the  funds  after 
checking  on  them,  it  Avould  be  unjust  that  they  should  be 
held  at  his  risk  or  his  liability  on  the  check  extended.*^ 
The  indorscr  of  a  check  wlio  is  a  new  drawer  avouM  also 
ordinarily  be  discharged  if  the  holder  had  it  certified  instead 
of  requiring  payment;  but  if  the  indorser  request  or  con- 
sent to  the  certification,  this  rule  would  not  apply  ;^^  and 
if  the  holder  of  a  certified  check  indorse  it,  his  indorsee  may 
hold  him  liable  as  well  as  the  bank.^'' 

§  38.  Form  of  certification,  and  by  whom  made. —  Xo  par- 
ticular words  are  essential  to  a  legal  certification  of  a  check 
—  it  is  usual  to  use  the  w^ord  "  good  "  ^'^  —  it  is  sufficient  if 
tho  names  or  initials  of  the  proper  officer  is  ^vrittcn  on,  or 
across,  the  face  of  the  check.*'^  In  England,  by  statute,  a 
distinct  promise,  written  and  signed,  is  requisite.  In  the 
United  States,  some  authorities  hold  that  a  verbal  statement 

62  Flour  City  Nat.  Bank  v.  Traders'  Nat.  Bank,  42  Hun,  244. 

63  Thomas  v.  Bank  of  British  North  America,  82  N.  Y.  1 ;  Farmers' 
Bank  v.  Bank  of  Allen  County   (Tenn.),  12   S.  W.   .54.5. 

64  First  Nat.  Bank  v.  Leach,  52  N.  Y.  .350;  Morse  on  Banking,  .382; 
Essex  County  Nat.  Bank  v.  Bank  of  Montreal,  7  Biss.  197. 

65  Mutual  Nat.  Bank  v.  Rotge,  28  La.  Ann.  933. 

66  Mutual  Nat.  Bank  v.  Botge,  28  La.  Ann.  933 ;  Daniel  on  Negotiable 
Instruments,  §  1G04. 

CTBarnet  v.  Smith,  10  Fost.  2.50. 
68  Morse  on.  Banking,  284. 


§§  39, 40.  CHECKS.  23 

(if  communicatedj  that  the  check  is  good  is  tantamount  to 
certification,*^"  while  the  Supreme  Court  of  the  United  States 
announces  the  proposition  tluit  such  verbal  certitication, 
even  when  communicated,  would  not  bind  the  bank  fur- 
ther  than  as  to  the  genuineness  of  the  drawer's  signature 
and  the  state  of  his  account.""  The  casliier  has  im])lied  au- 
thority to  certify  checks,  and  likewise  the  board  of  directors, 
or  any  other  officer  specifically  authorized.^^ 

§  39.  Stale  checks. —  A  check  is  payable  instantly  on  de- 
mand; and  should  be  presented  within  a  day  when  the  payee 
receives  it  in  the  i)lace  where  drawn,  and  forwarded  by  the 
next  day,  when  forwarding  is  necessary,  in  order  to  pre- 
serve the  payee's  recourse  against  the  drawer,  in  the  event 
of  a  failure  of  the  bank.""  lint  if  the  bank  remains  solvent 
the  holder  uiay  retain  the  clicck  as  long  as  he  pleases,  and 
hold  the  drawer  liable  until  the  time  for  suit  is  ended  by 
the  statute  of  limitations.^^  But  while  age  cannot  invalidate 
a  good  check  (unless  the  limitation  has  applied),  and  the 
fact  that  it  was  dishonored  when  transferred,  and  that  pre- 
sentment was  delayed,  does  not  lessen  the  drawer's  lia- 
bility,'"' unless  he  lias  suffered  loss;'^  yet  the  lapse  of  a  long 
period  from  its  date  before  its  payment,  is  a  circumstance 
so  out  of  the  ordinary  course  of  business  that  it  ought  to 
arouse  suspicions  and  excite  incpiiry.  And  the  bank  pay- 
ing, or  tlio  ]-)arty  receiving  such  a  check,  acts  at  his  peril. '^'' 

§  40.  Right  of  holder  of  uncertified  check  to  sue  bank. — 
This  is  an  unsettled  question,  but  the  weight  of  authority 

69  Bank  v.  Pettel,  41  111.  492;  Carr  v.  National  Secy.  Bank,  107  Mass. 
48. 

70  Espy  V.  Bank  of  Ciiifiiinati.    IS  Wall.  (!21. 

71  Merchants'  Bank  v.  State.  Bank.  10  Wall.  648;  Claflin  v.  Farmers' 
Bank,  25  X.  Y.  20.3:  Clarke  Nat.  Bank  v.  Bank  of  Albion.  .52  Barb.  .592; 
Cooke  V.  State  Xat.  Bank.  rrZ  N.  Y.  11.5;  Farmers  &  Mechanics'  Bank  v. 
Butchers,  etc.,  Bank,  14  X.  Y.  624;  Daniel  on  Xegotiable  Instruments, 
§§   1600-1611. 

72r)ajiiol  on  Xc^otiablo  Instruments,  §  1500  et  seq. 

73  Thompson  on  Bills,  118;  Daniel  on  Negotiable  Instruments,  §  1632. 

74  Cowing  V.  Altman.  70  X.  Y.  168. 

7''>  Daniel  on  Xegotiable  Instruments,   §   1590. 
7 ■•Daniel  on  Xcffotiable  Instruments,  §    1632. 


24       DIFFERENT  KINDS  OF   NEGOTIABLE    INSTKUMENTS.        §  41. 

in  this  country  and  in  England  supports  the  view  that  such 
suit  cannot  be  maintained.  The  courts  of  last  resort  in 
South  Carohna,  Louisiana,  Illinois,  Missouri,  and  Kentucky, 
and  possibly  other  States,  in  well  considered  cases  adhere 
to  the  view  that  the  check  holder  can  maintain  such  a  suit,''' 
wliilc  the  courts  of  very  many  States  have  taken  the  con- 
trary view.  The  Supreme  Court  of  the  United  States  has, 
in  a  number  of  decisions,  adopted  the  latter,  but  it  has 
qualified  its  opinion  by  remarking:  "  It  may  be  if  it  could 
be  shown  that  the  bank  had  charged  the  check  on  its  books 
against  the  drawer  and  settled  with  him  on  that  basis,  that 
the  plaintiff  could  recover  on  the  count  for  money  had  and 
received,  on  the  ground  that  the  rule  ex  aequo  et  hono  would 
be  applicable,  as  the  bank  having  assented  to  the  order,  and 
communicated  its  assent  to  the  paymaster  (the  drawer), 
would  be  considered  as  holding  the  money  to  the  plaintiff's 
use;  and  therefore  under  an  implied  promise  to  pay  it  on 
demand."  "^  And  in  Pennsylvania  the  exception  thus  sug- 
gested is  established.'^^  The  general  doctrine,  as  announced 
by  the  United  States  Supreme  Court,  is  supported  by  the 
English  cases.^*^ 

§  41.  Damages  for  improper  dishonor  of  check. —  Of  course 
the  check  holder  may  sue  the  drawer  of  the  check  on  its  dis- 
honor. The  depositor  may  always  recover  nominal  dam- 
ages from  the  bank  improperly  dishonoring  his  check,  and 
a  trader  may  recover  substantial  damages.  If  not  a  trader, 
the  depositor  would  have  to  allege  and  prove  special  in- 
jury.^^     An  agent  who  has  put  to  his  private  account  funds 

TTFogartios  v.  State  Bank,  12  Rich.  Law  (S.  C),  518;  Gordon  v. 
Mulcher,  34  La.  Ann.  G08;  Bank  of  America  v.  Indiana  Bkg.  Co., 
114  111.  483;  Roberts  v.  Austin,  26  Iowa,  310;  Coates  v.  Doran,  83  Mo. 
337;   Lester  v.  Given,  8  Bush.  3.58. 

78  Bank  of  Republic  v.  Millard,  10  Wall.  1.52;  First  Nat.  Bank  v. 
Whitman,   94  I-.   S.   343. 

79  Seventh  Nat.  Bank  v.  Cook,  73  Pa.  St.  485;  Saylor  v.  Bushong, 
100  Pa.   St.   23. 

SOHopkinson  v.  Forster,  18  Eq.  ('as.  L.  R.  74.  For  full  discussion 
of  the  cases  pro  and  con,  see  Daniel  on  Negotiable  Instruments,  §  1635 
et  seq. 

SlRolin  v.   Stewart,    14   C.  B.   607. 


§§  42,  43 


BILLS    OF    CREDIT. 


of  an  iindiscloseJ  principal,  may  recover  damages  from  the 
bank  for  refusal  to  honor  his  check  upon  them,  although  he 
had  improperly  obtained  them." 

SECTIOX  VI. 

BILLS    OF    CREDIT. 

§  42.  Tho  tenth  section  of  the  first  article  ot  the  consti- 
tution of  the  United  States  contains  certain  prohibitions 
and  restrictions  upon  the  power  of  the  States;  and  the  first 
clause  of  tho  section  reads  as  follows:  "  Xo  State  shall 
enter  into  any  treaty,  alliance,  or  confederation;  grant  let- 
ters of  niarquo  and  reprisal;  coin  money,  emit  bills  of 
credit;  make  anything  but  gold  and  silver  coin  a  tender  in 
payment  of  debts;  pass  any  bill  of  attainder,  ex  post  facto 
law,  or  law  impairing  the  obligation  of  contracts."  But  the 
inhibition  contained  in  that  instrument  is  limited  to  the 
States;  and  although  the  bill  may  be  designed  to  circulate 
as  currency,  if  it  be  not  emitted  by  a  State,  it  is  as  free 
from  impeachment,  as  in  violation  of  the  constitution,  as 
any  other  negotiable  paper.  A  State  may  therefore  grant 
acts  of  incorporation  authorizing  banks  or  other  associations 
to  issue  that  description  of  paper  to  answer  the  purposes 
of  money,  and  it  may  be  issued  by  private  persons  and  part- 
nerships. This  was  deteniiined  by  the  United  States  Su- 
preme Court  in  a  case  involving  an  act  of  the  Legislature 
of  Kentucky,  which  incorporated  the  "•  Bank  of  the  Com- 
monwealth of  Kentucky,"  in  behalf  of  the  conunonwealth, 
the  president  and  directors  of  which  were  chosen  by  the 
Ix^gislature.^"' 

^  43.  Definition  and  nature. —  A  bill  of  credit  is  a  nego- 
tiable paper  designed  to  pass  as  currency  and  circulate  as 
luoney.  Such  a  bill  of  credit  as  comes  within  the  constitu- 
tional ])r(>hibitiou  is  a  negotiable  paper  issued  by  the  sov- 

.'^^Tassell  V.  Cooper,  9  C.  B.  509;  Daniel  on  Negotiable  Instruments, 
§   1642. 

83  Briscoe  v.  Bank  uf  Kentucky,  11  Pet.  433. 


I'G       DIFFEKKNT   1-:i:N"DS  OK   NEGOTIABLE    INSTRUMENTS.        §  44. 

creign  powtT  of  one  of  the  United  States,  and  designed  to 
pass  as  currency  and  circulate  as  money. 

The  nature  of  this  chiss  of  negotiable  instruments,  and 
the  object  and  spirit  of  the  constitutional  restriction,  first 
received  a  judicial  exposition  in  the  case  of  Craig  v.  State 
of  Missouri.**'*  In  that  case  it  appeared  that  the  State  of 
Missouri,  mth  a  view  to  relieve  the  necessities  of  the  times, 
established  loan  offices  to  loan  certain  sums  to  citizens,  tak- 
ing security  by  mortgage  redeemable  in  instalments. 

SECTION  VII. 

QUASI-NEGOTIABLE    INSTRUMENTS. 

§  44.  The  phrase  gwasi-negotiable  has  been  termed  an 
unhappy  one;  and  certainly  it  is  far  from  satisfactory,  as 
it  conveys  no  accurate,  well-defined  meaning.  But  still  it  de- 
scribes better  than  any  other  short-hand  expression  the  na- 
ture of  those  instruments  which,  w-hile  not  negotiable  in  the 
sense  of  the  law  merchant,  are  so  framed  and  so  dealt  with, 
as  frequently  to  convey  as  good  a  title  to  the  transferee  as 
if  they  were  negotiable. 

Very  frequently  by  application  of  the  principles  of 
estoppel,  and  to  effectuate  the  ends  of  justice  and  the  in- 
tention of  the  parties,  the  courts  decree  a  better  title  to 
the  transferee  than  actually  existed  in  his  transferrer;  and 
the  result  reached  in  many  cases  is  the  same  as  would  be 
reached  if  the  instrument  were  negotiable. ^^ 

§  45.  Nature  of  certificates  of  stock. —  A  share  in  the  cap- 
ital stock  of  a  corporation  is  not  a  debt,  nor  money,  nor  a 
security  for  money,  but  it  is  a  species  of  incorporeal  per- 
sonal property.^  The  capital  stock  of  the  corporation  is  so 
much  money,  or  property  assessed  at  money  valuation,  which 
is  divided  into  a  number  of  shares,  which  shares  are  the 
holder's  interest  in  the  corporate  estate.  The  stock  of  the 
corporation  is  generally  raised  by  mutual  subscription  of 

84  Crai^  V.  State  of  Missouri,  4  Pet.  411. 
fis  Railroad  Co.  v.  Howard.  7  Wall.  415. 
8C  Allen  V.  Pegram,   IG  Iowa,  173. 


g§  4G,  47.  QUASl-NE(iOTIAIJLE   I.XSTKL'MKXTs.  1^7 

the  lueniLerri  in  the  lirst  instance,  and  its  amount  is  regu- 
lated by  the  statutory  provisions  by  or  under  whicli  the 
cor]ioration  is  chartered.  The  persons  interested  in  the  cor- 
poration are  termed  shareholders,  or  stockholders;  and  cer- 
tificates of  stock  are  <;('nerally  issued  to  them  by  the  cor- 
porate authorities  of  tlie  muniiiT^nts  of  their  title  to  a  pro- 
l)ortionate  part  of  ilic  prolits  of  the  coqjoration,  and  as 
evidence  of  their  right  to  participate  in  its  concerns,  I'nless 
otherwise  provided  by  statute,  the  shares  in  the  corporation 
are  generally  deemed  personal  estate.^" 

The  certificate  of  stock  is  the  customary  and  convenient 
evidence  of  the  holder's  interest  in  the  corporation  which 
issues  it,  but  in  the  absence  of  legal  provisions  requiring  it, 
no  certificate  of  stock  is  necessary  to  attest  the  rights  of 
the  shareholder.^^ 

g  46.  Transfer  of  certificates  of  stock. —  As  between  trans- 
ferrer and  transferee  of  a  stock  certificate, —  It  is  very  well 
settled  that,  in  the  absence  of  statutory  restrictions,  the 
beneficial  interest  ]>asses  by  assignment,  and  delivery  of 
the  certificate,  as  in  the  case  of  any  other  species  of  per- 
sonal property,  or  chose  in  action,  no  particular  formality 
being  necessary  to  invest  the  transferee  with  the  right  and 
title  of  the  transferrer,  as  between  the  parties  to  the  trans- 
fer.^^  The  equitable  title  passes  as  between  the  immediate 
parties,  whatever  may  be  the  rights  of  others  in  the  prem- 
ises.^" And,  as  a  general  rule,  statutory  restrictions  do  not 
.affect  the  immediate  parties  to  the  transfer,  being  designed 
for  other  purposes. 

§  47.  As  between  transferee  of  certificate  and  creditor  of 
transferrer. —  Tt  would  seem  that  any  ho7ia  fide  assignment 
of  the  stock  for  value  would  effectually  pass  the  transfer- 
s'Hutching*  V.  State  Bank,   12  Mete.    (Mass.)    421:   Payne  v.  Eliott, 
54  Cal.  .3.30:  Daniel  on  Xegotiable  Instruments.  §  ITOSrr. 

8S  Chester  Glass  Co.  v.  Dewey.  10  ;\rass.  04:  Ajrrioultural  Bank  v. 
Burr.  24   Me.   2'^C^. 

S9  Daniel  on  Negotiable  Instruments,   §   17085. 

so.TolmsoTi,  V.  T'nderhill.  r)2  X.  Y.  203;  .lohnston  v.  Laflin.  103  U.  S, 
804;  Gilbert  v.  Iron  Mfg.  Co.,  11  \Yend.  628. 


28       DIFFERENT  KINDS  OF   NEGOTIABLE    INSTRUMENTS.        §  48. 

rer's  interest  therein,  so  far  as  to  supersede  the  right  of 
an  attachment  or  execution  creditor  to  levy  upon  it  for  a 
debt  due  by  the  transferrer.  For  whether  such  assignment 
vest  the  legal  or  equitable  interest  of  the  assignor  in  the 
assignee,  no  property  right  of  the  assignor  remains  that  is 
subject  to  legal  process;  and  the  provisions  of  corporate 
charters  that  no  transfer  of  stock  shall  be  valid  or  effectual 
until  entered  or  registered  upon  the  books  of  the  coi-pora- 
tion,  are  manifestly  designed  for  the  security  of  the  cor- 
poration itself,  and  of  third  persons  taking  transfers  of  stock 
without  notice  of  any  prior  equitable  transfer,  and  are  not 
made  with  reference  to  the  rights  of  creditors  of  a  stock- 
hohlcr.'"^^  This  is  in  accordance  with  the  general  principles 
applicable  to  all  manner  of  equitable  assignments  of  per- 
sonal property. 

g  48.  As  between  the  transferee  of  a  certificate  of  stc3k, 
and  a  third  party  who  has  purchased  the  shares,  the  better 
opinion  is  that  a  bona  fide  transfer  of  the  certificate  carries 
with  it  the  transferrer's  interest  in  the  stock,  and  that  a 
subsequent  purchaser  who  simply  relies  on  the  books  of  the 
corporation  for  information  as  to  who  are  stockholders,  and 
who  buys  the  shares  without  taking  the  certificate,  does 
so  at  his  peril.  The  certificate  is  the  muniment  of  title. 
It  is  generally  dealt  A\fith  as  the  representative  of  the  pro- 
portionate interest  it  assures;  and  if  not  in  possession  of 
the  party  offering  to  sell  the  shares,  a  purchaser  would  be 
put  upon  inquiry  to  ascertain  the  true  condition  of  things. 
And  on  the  other  hand,  a  purchaser  of  the  certificate  from 
one  whom  it  testifies  to  be  a  shareholder,  would  have  a 
right  to  suppose  that  no  one  would  have  bought  the  shares 
without  taking  the  customary  evidence  of  title. ^^  If  the 
corporation  should  actually  transfer  the  shares  upon  its 
books  to  a  subsequent  purchaser  without  surrender  of  the 
certificate,  it  would  act  wTongfully  and  would  be  bound  to 

91  Black  V.  Zacharie,  .3  TTow.  483;  Newberry  v.  Detroit  Iron  Co.,  17 
Mich.   141;   Daniel  on  Negotiable  Instruments,  §   1708c. 

02  People's  Bank  v.  Gridley,  91  111.  457;  Sabin  v.  Bank  of  Worcester, 
21  Me.  353;  Pinkerton  v.  Manchester  R.  Co.,  42  N.  H.  424. 


§§  40,  50.  QUASI-XKGOTIAIJLK     IXSTIU-.M  KNTS.  29 

issue  certificates  to  the  prior  i)iircha>cr,  wlio  had  acquired 
the  stock  by  trausfer  of  the  certificate  in  due  course."'' 

§  49.  Usual  methods  of  transfer  of  stock. —  Ou  the  back  of 
the  ccrtiticatc-s  there  is  generally  a  i)rinted  form  of  sale 
and  assi<;-nnient,  with  an  irrcv(.cable  power  of  atloniey  in 
blank,  authorizing  the  unnamed  person  to  do  all  things 
reiiuisite  to  perfect  the  transfer  on  the  books  of  the  corpo- 
ration. When  such  formal  assignment,  and  power  of  attor- 
ney in  blank,  is  signed  by  the  shareholder,  and  the  certificate 
is  deliveretl  therewith,  an  ai)parent  ownership  in  the  shares 
represented  is  crfMitcMJ  in  the  holder.  And  the  general  ]iriii- 
ciple  sustained  by  the  great  weight  of  authority,  as  well 
as  of  reason,  is  that  when  the  owner  of  a  certificate  of 
stock  with  such  a  power  of  attorney  in  blank  thereon  writ- 
ten, or  thereunto  attached,  intrusts  it  to  an  agent  with 
power  to  doal  therewith,  a  bona  fide  purchaser  for  value 
\dthout  notice  will  be  protected  in  his  ac(|uisition  of  the 
certificate,  although  the  agent  to  whom  it  has  been  intrusted 
has  diverted  it  from  the  purposes  for  which  it  was  ])nt  in 
his  charge,  or  has  been  guilty  of  a  fraud  oi-  breach  of  trust 
in  reference  thereto.  This  doctrine  does  not  rest  upon 
the  idea  that  the  certificate  of  stock  is  a  negotiable  instni- 
ment;  but  upon  the  equitable  ])rin('i])le  that  where  a  person 
confers  upon  another  all  the  indicia  of  ownershij)  of  i)rop- 
erty,  with  comprehensive  and  apparently  unlimited  powers 
in  reference  thereto,  he  is  estopped  to  assert  title  as  against 
a  third  person,  who,  acting  in  good  faith,  acquires  it  for 
value  from  the  ap]')arent  o\\mer.^'* 

§50.  Bills  of  lading,  their  nature. —  A  bill  of  lading  may 
be  defined  to  be  a  written  acknowledgment  by  the  master 
of  a  ship,  or  the  representative  of  any  common  carrier, 
that  he  has  received  the  goods  therein  d*escribed  for  the 
voyage  or  journey  stated,  to  be  carried  upon  the  terms  and 
delivered  to  the  persons  therein  specified.     It  is  at  once  a 

O^Cushnian  v.  Thavor  'y.\fg.  Co.,  76  X.  Y.  2(17:  Danitl  on  Negotiable 
InstrumeTits.   §   1708/. 

04,Tolniston  v.  Laflin.  103  V.  S.  .«00.  and  cases  cited  in  n<.to  to  Daniel 
on  Negotiable  Instruments.  §   1708^7. 


30        BIFFEKE.XT   KI>:DS   OF    XEGOTIABLE    IXSTRUMKXTS.        §   51. 

receipt  for  the  goods  which  renders  the  carrier  responsible 
as  their  custodian,  and  an  express  written  contract  for  their 
transportation  and  delivery.  And  to  facilitate  commercial 
transactions,  it  has  grown  to  be  regarded  as  the  symbolical 
representative  of  the  goods  which  it  describes;  and  its  trans- 
fer carries  M-ith  it  such  rights  as  the  party  in  possession  of 
the  goods  could  transmit  by  actual  corporeal  transfer  of 
the  goods  themselves. ^'^ 

§  51.  Analogous  to  negotiable  instruments. —  The  idea  that 
bills  of  lading  are  negotiable  arose  from  the  use  to  which 
they  were  appropriated  in  the  transfer  cf  goods  purchased, 
before  they  were  delivered  to  the  purchaser,  or  before  they 
were  paid  for;  but  it  ^\'ill  be  seen  that  their  peculiar  prop- 
erties are  attributable  rather  to  a  lil)eral  application  of  the 
doctrine  of  equitable  estoppel  for  the  benefit  of  trade,  than 
to  any  custom  or  statute  which  placed  them  upon  the  foot- 
ing of  negotiable  instrimients,'"'  for  both  of  these  sources 
of  negotiability  are  wanting.  The  consignor  of  goods 
shipped  takes  from  the  master  of  the  ship  a  bill  of  lading, 
and  sending  it  to  the  consignee  who  has  ordered  the  goods, 
draws  npon  him  by  bill  of  exchange  for  the  purchase  money. 
Before  the  goods  reach  their  destination  the  consignior,  who 
in  the  case  instanced  is  the  vendor  of  the  goods,  learns  that 
the  vendee  is  insolvent;  and  to  prevent  the  injustice  which 
would  be  done,  if,  in  consequence  of  the  vendee's  insolvency, 
and  while  the  price  is  yet  nnpaid,  they  were  to  be  seized 
upon  in  satisfaction  of  his  liabilities,  the  law  confers  npon 
the  vendor  the  right  to  stop  the  goods  in  transitu,  and  to 
retain  them  until  the  whole  purchase  money  is  paid.^^ 

But  suppose  the  consignee  has  received  the  bill  of  lading 
of  the  goods,  deliverable  to  him  or  his  assigns,  or  indorsed 
to  him  or  his  assigns,  by  the  consignor,  and  has  assigned 
the  bill  by  indorsement  to  a  hma  fide  third  party,  then  the 
vendor's  right  to  stop  the  goods  in  transitu  and  hold  them 
as  security  for  the  purchase  money  is  defeated,  and  the  as- 

95  Daniel  on  Negotiable  Instruments,   §   1728. 
9«  Security  Bank  v.  Luttpren,  29  Minn.  366. 
OTOibFon   V.  Canuthers.  8  M.   &  W.   336. 


§  52.  QUASi-XK(;<)Ti.\i'.i,i-:   i.nsthlments.  ol 

signee  of  the  liill  acfiiiirfs  as  i)crf('ct  a  title  to  the  f^oo<l>, 
although  they  have  not  reached  tlie  hnyer's  hands,  as  if 
thov  had  actually  passed  through  his  hands  and  been  deliv- 
cicd  Ixidily  to  him.  This  was  decided  in  the  leading  cii.se 
i)f  Lickharrow  v.  .Mnsim,''''  and  iiiiiy  now  he  regarded  as  the 
settled  law  of  England  and  of  tlie  I'nited  States.'"*  But 
this  (•a])acity  of  the  hill  of  lading  for  transferring  the  right 
(d"  ])i-()i)('rty,  under  these  circumstances,  does  not  imply  that 
it  is  a  negotiable  instrument  to  all  intents  and  purposes. 
The  assignee  of  the  bill  of  lading  is  ])rotected  because  the 
vendor  of  the  goods  has  placed  in  the  hands  of  his  assignor 
a  muniment  of  title,  ch)thing  him  with  apparent  ownershi]) 
of  the  goods,  and  it  is  inequitable  that  a  secret  trust  should 
be  enforced  in  favor  of  the  vendor,  w^ho  has  issued  such 
muniment  of  title  against  a  person  who  has  taken  an  as- 
signment of  it  for  valuable  consideration,  and  without  no- 
tice of  such  circumstances  as  render  it  not  fairly  and  hon- 
estly assignable.^ 

^  52.  Transfer  of  bill  of  lading. —  Thus  the  bill  of  lading 
passes  the  property,  when  it  is  indorsed  and  intended  bo  to 
operate,  in  the  same  manner  as  a  direct  doliveiy  of  the  goods 
would  do  if  so  intended,  and  it  operates  no  further.  It  con- 
stitutes a  symbolic  and  constructive  delivery  of  the  goods," 
being  the  proper  substitute  for  the  actual  delivery  of  goods 
at  the  time  at  sea  en  route  to  the  consignee,  and  the  arrival 
and  delivery  of  which  the  consignor  has  placed  it  in  liis 
power  by  the  bill  of  lading  to  anticipate.^ 

Delivery  of  the  bill  without  indorsement,  has  been  held 
sufficient  to  pass  the  title  where  the  person  to  whom  it  Avas 

J»«  1   .Sniitir.s  Lead.   Cas.  895. 

l!9Ne\vhall  v.  Central  P.  R.  Co.,  51  Ct;l.  345;  Daniel  on  Xegotiable 
Instruments,  §    1729. 

1  Shaw  V.  Railroad  Co.,  101  U.  S.  504;  Brewster  v.  Sime.  42  Cal.  1.30. 

2  Mechanics',  etc.,  Bank  v.  Farmers',  etc..  Bank,  CO  X.  Y.  47:  Forbes 
V.  Boston  &  Lowell  R.  Co..  133  Mass.  154;  Daniel  on  Negotiable  Instru- 
ments, §  1731. 

■■!  Pratt  V.   Parkman.  24   Pi(k.   42. 


o2       DI^FERE^'T  KI^'DS  OF  NEGOTIABLE    IXSTKUMENTS.       §  53. 

(Iclivered,  was  recognized  upon  the  face  of  the  bill,  as  the 
person  entitled  to  the  nltimate  possession  of  the  goods.* 

§  53.  Warehouse,  or  dock,  receipts —  This  species  of  con- 
tracts is,  independent  of  statute  law,  of  modem  invention, 
and  does  not  rest  like  bills  of  lading  upon  ancient  mercantile 
custom  imparting  to  them  a  (/uas/'-negotiability.  ''These 
documents,"  says  Blackburn,  J.,  "  are  generally  written 
contracts,  by  which  the  holder  of  the  indorsed  document 
is  rendered  the  person  to  whom  the  holder  of  the  goods  is 
to  deliver  them,  and  in  so  far  they  greatly  resemble  bills 
of  lading;  but  they  differ  from  them  in  this  respect,  that 
when  goods  are  at  sea,  the  purchaser  who  takes  the  bill  of 
lading  has  done  all  that  is  possible  in  order  to  take  posses- 
sion of  the  goods,  as  there  is  a  physical  obstacle  to  his  seek- 
ing out  the  master  of  the  ship,  and  requiring  him  to  attorn 
to  his  rights;  but  when  the  goods  are  on  land,  there  is  no 
reason  why  the  person  who  receives  a  delivery  order,  or 
dock  warrant,  should  not  at  once  lodge  it  with  the  bailee, 
and  so  take  actual  or  constructive  possession  of  the  goods. 
There  is,  therefore,  a  very  sufficient  reason  why  the  cus- 
tom of  merchants  should  make  the  transfer  of  the  bill  of  lad- 
ing equivalent  to  an  actual  delivery  of  possession,  and  yet 
not  give  such  an  effect  to  the  transfer  of  documents  of  title 
to  goods  on  shore. ^ 

§  54.  Their  nature. —  Warehouse  receipts,  pure  and  sim- 
ple, wdth  only  the  incidents  annexed  to  them  by  law,  and 
none  superadded  by  special  contract,  conduct,  or  representa- 
tion, are  no  more  obligatory  in  the  hands  of  bona  fide  hold- 
ers for  value,  than  in  the  hands  of  the  bailor  of  the  prop- 
erty stored;  but,  if  warehouse  receipts  of  a  special  form 
and  character  bo  adopted  and  issued  in  due  course  of  busi- 
ness, for  the  express  purpose  of  being  pledged  as  security 
to  obtain  money,  and  if,  as  a  part  of  the  regular  system  of 
using  them  the  warehouseman  acknowledge  in  writing  on 
each   receipt   notice   of   assignment   l)y   the  pledgor   to   the 

4  Campbell  v.   Alfonl,   T)"  Tex.    101. 

•''•  P.lac-kbnrn  on  Sales,  297;  Benjamin  on  Sales,  613;  Fairina  v.  Home, 
10  M.  &  W.  119. 


§  55.  QUASl-xN'KGOTlAIiLE    IN.STKUMENTS.  33 

pledgee  before  the  lutter  advances  his  money  tliereon,  the 
pledgee  after  advancing  his  money  in  good  faitli,  is  entitled 
to  stand  on  the  terms  of  the  pledged  receipt.  Thus,  though 
in  fact  no  goods  had  l)een  received  for  storage,  the  recital 
in  the  special  receipt  being  utterly  false,  nevertheless  the 
recital  will  have  the  same  effect  in  protecting  such  bona  fide 
pledgee,  as  if  the  goods  had  been  received  and  stored."  ° 

§  55.  Statutory  changes. —  There  are  statutory  enactments 
in  England  which  greatly  enlarge  the  effect  of  such  instru- 
ments.' In  Virginia,  by  act  of  Assembly,  warehouse  re- 
ceipts (for  produce)  are  made  negotiable  under  certain 
rules  and  regulations,*^  and  in  Minnesota  they  are  negotiable 
by  indorsement  and  delivery.^  And  so  in  Ohio,  and  per- 
haps in  other  States.^** 


^;  Planters'  Rice  Mill  Co.  v.  Merchants'  Nat.  Bank,  78  Ga.  .582. 

7  Benjamin  on  Sales,  607. 

8  Acts  of  Assembly  of  1874,  p.  233. 

9  State  V.  Loomis,  27  Minn.  521 ;  National  Exoh.  Bank  v.  Wilder,  34 
:\rinn.  149;  Brooks  v.  Hanover  Nat.  Bank,  2G  Fed.  301. 

10  Cleveland  v.  Sherman,  40  Ohio  St.  176;  Conrad  v.  Fisher,  37  Mo. 
App.  367. 

3 


CHAPTER  III. 

FORMAL  REQUISITES  OF  NEGOTIABLE  INSTRUHENTS. 


SECTION  I. 


DIFFERENCE   IN    STRUCTUEE    BETWEEN    BILLS    OF    EXCHANGE    AND- 
PROMISSORY  NOTES. 

§56.  Difference  between  bills  and  notes. —  In  their  orig- 
inal structure,  a  bill  of  exchange  and  a  promissory  note  do 
iiot  strongly  resemble  each  other.  In  a  bill,  there  are  three 
original  parties:  drawer,  drawee,  and  payee;  in  a  note  only 
two:  maker  and  payee.  In  a  bill,  the  acceptor  is  the  pri- 
mary debtor.  In  a  note,  the  maker  is  the  only  debtor.  But 
if  the  note  be  transferred  to  a  third  party  by  the  payee,  it 
becomes  strikingly  similar  to  a  bill.  The  indorser  becomes 
then,  as  it  were,  the  drawer,  the  maker  the  acceptor,  and 
the  indorsee  the  payee. 

SECTION  II. 

FORMALITY  IN  RESPECT  TO  STYLE  AND  MATERIAL. 

§  57.  The  law  does  not  require  any  particular  form,  either 
as  to  a  bill  of  exchange  or  promissory  note,  or  other  nego- 
tiable instrument,  and  while  it  would  be  unwise  to  depart 
from  the  approved  forms  in  vogue  amongst  merchants,  yet 
the  law  respects  substance  more  than  form;  and  where  the 
intention  appears  to  assume  the  obligations  which  de- 
volve upon  drawers  and  makers  of  negotiable  instruments, 
it  will  be  enforced,  although  not  evidenced  in  the  usual 
commercial  form.  Thus,  an  order  written  under  a  note, 
"  Please  pay  the  above  note,  and  hold  it  against  me  in  our 
settlement,"  signed  by  the  drawer  and  accepted  by  the 
drawee,  has  been  held  a  good  bill;^  and  so,  also,  it  has 
been  held  that  a  like  order  written  under  an  account  is  a 

1  Leonard  v.  Mason,  1  Wend.  252. 
[34] 


§  58.        KOK.MAl.nv    l.\    KESI'ECT  TO  STYLE   AND    MATKKIAL.        ')0 

bill  uf  t'xclian{:,e."  And  where  an  iiidort^ement  wu.-,  made 
on  a  bond,  ordering  the  contents  to  be  paid  to  order  for 
value  received,  it  Avas  held  a  p^ood  bill/ 

g  58.  Signature  and  material. —  It  docs  not  matter  upon 
what  i)ortion  of  the  instrnnient,  the  maker  or  drawer  af- 
fixes his  name,  so  that  he  signs  as  drawer  or  maker.*  It  is 
not  material  whether  the  writing  is  in  pencil  or  ink,^  al- 
though as  matter  of  permanence  and  security,  ink  is,  of 
course,  preferable.  And  the  name  may  be  printed  as  well 
as  written,  though,  in  such  cases,  it  cannot  prove  itself,  and 
must  be  shown  to  have  been  adopted  and  used  by  the  party 
as  his  signature."  If  another  sign  the  name  of  the  party 
in  his  presence  and  at  his  request,  it  is  the  same  as  if  he 
did  it  himself;"^  and  if  another  sign  the  party's  name  by  ver- 
bal or  other  authority,  it  is  sufficient.^  The  full  name  may 
be  -written;  and  at  least  the  surname  should  appear,  and 
generally  does.  But  this  is  not  indispensable  —  the  initials 
are  sufficient,^  and  any  mark  which  the  party  uses  to  indi- 
cate liis  intention  to  bind  himself  will  be  as  effectual  as  his 
signature,^'^  whether  there  be  a  certificate  of  witnesses  on 
the  instrument  or  not.^^  But,  of  course,  a  mark  does  not 
prove  itself  like  a  signature,  although  it  is  an  adminicle  of 
proof  .^^  -^ny  peculiarity  in  it  may  be  showm  as  evidence  of 
its  genuineness;^^  but,  unless  there  be  an  attesting  witness, 
or  one  who  saw  it  written,  or  is  familiar  w'ith  its  character- 

2  Hoyt  V.  Lynch,  2  Sandf.  328. 

3  Bay  V.  Frazer,   1  Bay,  66. 

4Clason  V.  Bailey,  14  Johns.  484:  Schmidt  v.  Schmaeller,  45  Mo.  502. 
5  Reed  v.  Roark,  14  Tex.  .329:   Closson  v.  Stearns,  4  Vt.  11. 
•'Brown  v.  Butchers'  Bank,  fi  Hill.  443;  Schneider  v.  Norris,  2  ^laule 
&  S.  286. 

7Sager  v.  Tupper,  42  ]\rich.   605. 

8  Daniel  on  Nef|:otiable  Instruments,   §§  274,  299. 

9  Merchants'  Bank  v.  Spicer,  6  Wend.  443;  1  Parsons  on  Notes  and 
Bills,  36. 

10  Lyons  v.   IIoliiios,   11    S.   C.  429. 

"Wil]ou<rhby  v.  :\Ioulton,  47  N.  H.  205;  Shank  v.  Butsch,  28  Ind.  19. 
i2Hilborn  v.  Alford.  22  Cal.  482;   Flowers  v.  Billino;.  45  Ala.  488. 
13  George  v.  Surrey,  1  Moody  &  M.  516;  2  Parsons  on  Notes  and  Bills, 
480. 


36  FOli-MAL    REQUISITES    OF    INSTRUMENTS.        §§  59,  GO. 

isties,  the  plaintiff  cannot  recover.^*  Nor  is  it  necessary 
that  the  snbstance  npon  which  the  instrument  is  written 
shoiikl  be  paper  —  parchment,  cloth,  leather  or  any  other 
substitute  for  paper  will  suffice. ^^ 

§  59.  Whole  instrument  must  be  in  writing. —  The  whole 
of  the  bill  or  note  must  be  expressed  in  writing.  But  all 
of  it  need  not  be  in  the  body  of  the  instrument;^"  and  a 
contemporaneous  memorandum  or  indorsement  on  any 
part  of  it  may  qualify  its  terms  by  making  it  payable  upon 
a  contingency,^^  or  at  a  particular  place,^**  or  providing  that 
it  may  be  renewed. ^^  And  there  may  be  a  written  stipu- 
lation on  a  detached  paper  affecting  the  instrument,  which 
would  be  admissible  as  between  the  original  parties  and 
their  representatives;^  but  such  stipulation  would  not  af- 
fect a  bona  fide  holder  for  value,  who  acquired  it  without 
notice.^^  But  a  party  having  notice  would  stand  on  no  bet- 
ter footing  than  the  original  parties.^^  Whether  the  in- 
strument be  a  bill  of  exchange  or  a  promissory  note,  or 
other"wise,  and  whether  or  not  it  be  negotiable,  must  be  de- 
termined by  its  face,  without  reference  to  any  other  source.^^ 

§  60.  Parol  evidence —  It  is  a  general  principle  of  law  that 
parol  evidence  is  inadmissible  to  vary  or  contradict  a  writ- 
ten contract.  Therefore,  if  a  negotiable  contract  be  ab- 
solute and  complete  upon  its  face,  no  evidence  of  a  verbal 
agreement  made  at  the  time,  qualifying  its  terms,  can  be 
admitted.^     This  principle  applies  to  every  element  of  the 

14  Thompson  on  Bills,  30,  31,  33. 

15  Daniel  on  Negotiable  Instruments,  §  77. 

16  Daniel  on  Negotiable  Instruments,  §  79;  Goldman  v.  Blum,  .58 
Tex.  636. 

17  Hughes  V.  Fislier,  10  Colo.  385;  Wheelork  v.  Freeman,  13  Pick.  168. 
IS  Hughes  V.  Fisher,  10  Colo.  385;  Wheelock  v.  Freeman,  13  Pick.  168. 
10  Hartley  v.  Wilkinson,  4  Maule  &  S.  25. 

20  Bowerbank  v.  Monteiro,  4  Taunt.  844. 

21  Hoare  v.  Graham,  3  Campb.  57. 

22  Gibbon  v.  Scott,  2  Stark,  286. 
2.iStrachan  v.   Muxton,  24  Wis.  21. 

24Burne3  v.  Scott,  117  U.  S.  582;  Whitwell  v.  Winslow,  133  Mass. 
343. 


§  61.        FOKMAI.ITY  IX   JJKSl'ECT  TO  STYLE  AND  MATKKIAI..        oT 

instrument,  and  it  follows  that  no  condition  can  be  engrafted 
in  tlio  instrument  by  verbal  testimony  —  as  that  it  should 
bo  void  unless  others  interested  agreed  to  the  settlement  in 
■which  it  was  given  ;-'^  or  was  to  be  void  if  certain  bills 
should  be  paid  at  maturity ;^^  or  was  to  be  void  or  surren- 
dered up  in  the  event  the  case  in  which  it  was  given  for 
a  fee  was  compromised,^  or  in  any  other  contingency.-* 
Xor  can  it  bo  shown  that  it  was  only  to  be  paid  out  of  a 
particular  fund  or  estate.^  The  Supreme  Court  of  the 
United  States,  in  the  case  of  Bro\\Ti  v.  Spofford,  thus  com- 
prehensively and  tersely  states  the  law:  ''  Negotiable  notes 
are  written  instruments,  and  as  such  they  cannot  be  con- 
tradicted, nor  can  their  terms  be  varied  by  parol  evidence; 
and  that  proposition  is  universally  true  where  the  promis- 
sory note  is  in  the  hands  of  an  innocent  holder."  ^^ 

§  61.  Contemporaneous  written  agreements. —  But  contem- 
poraneous written  agreements  {ire  achnissible  for  the  pur- 
pose of  controlling  the  eifect  of  a  negotiable  instniment,  as 
between  immediate  parties  and  those  having  notice  ;^^  and 
a  purchaser  after  maturity,  of  a  negotiable  instnunent, 
would  be  bound  by  such  agreement,  when  established.^^ 
Parol  evidence  is  generally  admissible,  as  between  the  par- 
ties, to  show  their  real  relations  to  each  other  ;^^  and  if  there 
be  a  latent  ambiguity,  to  explain  it.^'*  And  if  by  mistake 
the  instrument  were  given  for  too  large  an  amount,  the  bet- 
ter opinion  is  that  it  may  bo  shown,  for  as  to  the  mistaken 

^  Ely  V.  Kilboin,  5  Den.  514. 
2C  Penny  v.  Graves,   12  111.   187. 

27  Dale  V.  Pope,  4  Litt.  166. 

28  Potter  V.  Earnest,  45  Ind.  418;  Wayland  Univ.  v.  Boorman,  56  Wis. 
660. 

29  BroAni  V.  Spofford.  !)5  U.  S.  482;  Adams  v.  Wilson,  12  :\Ietc. 
(Mass.)    138. 

30  Brown  v.  Spofford,  95  U.  S.  482. 

31  Goodwin  v.  Nickerson,  51  Cal.  166;  Lebanon  Sav.  Bank  v.  Penney, 
46  N.  W.   331. 

32Munro  v.  Kinjr,  3  Colo.  238. 
33Houck  V.  Graham,   106  Ind.  195. 
34W'harton  on  Evidence,  §  956. 


3S  FORMAT.    REQUISITKS    OF    INSTRUMENTS.        §§  62,  G3. 

excess  there  is  partial  want  of  consideration."'^  And,  in 
o-eneral,  parol  evidence  is  admissible  between  the  original 
parties  to  show  frand,  accident,  or  mistake  in  the  creation 
of  the  instrument.^"  Also  to  set  np  a  verbal  agreement  by 
])erformance  of  which  the  wa-itten  contract  has  been  dis- 
charged.^' 

§  62.  The  date. —  The  date  is  nsually  written  in  the  right- 
hand  corner  of  the  instrument;  but  a  date  is  not  essential 
to  the  validity  of  the  instrument;^*  and  it  is  of  no  conse- 
quence on  Avhat  portion  of  the  paper  it  is  written.^^  If 
there  be  no  date,  it  will  be  considered  as  dated  at  the  time 
it  was  made,'**^  and  parol  evidence  is  admissible  to  show  from 
what  time  an  undated  instrument  was  intended  to  operate,^^ 
or  to  show  that  there  was  a  mistake  in  the  date.^^  If  dated, 
it  -will  be  presumed  to  have  been  executed  on  the  day  it 
bears  date.'*''  If  undated,  but  containing  a  reference  to 
date,  it  will  date  from  delivery.^^  When  a  note  without 
date  is  made  for  another's  accommodation,  the  maker  au- 
thorizes him  to  fill  up  the  date  as  he  sees  fi.t.'*'^ 

§  63.  Words  of  negotiability. —  No  precise  form  of  wordg 
is  necessary  to  impart  negotiability.  As  has  been  said  in 
Pennsylvania,^"  '^ '  order  '  or  '  bearer  '  are  convenient  and  ex- 

S^Claxon  V.  Demaree,  14  Bush,  173;  Daniel  on  Negotiable  Instru- 
ments, §§  816,  179,  201.  But  see  Downs  v.  Webster,  Brayt.  79;  2 
Parsons  on  Notes  and  Bills,  505. 

36  Phillips  V.  Meily,  106  Pa.  St.  53G. 

■iT  Howard  v.  Stratton,  64  Cal.  487. 

33  ;\Iichigan  Ins.  Co.  v.  Leavenworth,  30  Vt.  11;  Drake  v.  Rogers,  32 
Me.   524. 

"JS  Shepherd  v.  Graves,  14  How.  505. 

40  Cowing  V.  Altman,  71  N.  Y.  441;  First  Nat.  Bank  v.  Hunt,  25  Mo. 
App.    174. 

41  Richardson  v.  Ellet,   10  Tex.  190;   Lean  v.  Lozardi,  27   Mich.  424. 

42  Biggs  v.  Piper,  86  Tenn.  589;  Paige  v.  Carter,  64  Cal.  489. 

43  Kinsely  v.  Sampson,  100  111.  574. 

44Armitt  v.  Breame,  2  Ld.  Raym.  1076;  Styles  v.  Wardle,  4  B.  &  C. 
908. 

45  Androscoggin  Bank  v.  Kimball,  10  Cash.  373;  Shultz  v.  Payne,  7 
La.   Ann.   222. 

4*i  Daniel  on  Negotiable  Instrimients,  §  106;  Raymond  v.  Middleton. 
29   Pa.   St.   530. 


§§  G4,  05.  SETS     I.\     FOICKKiX     lULLS.  39 

pressive,  but  clearly  uol  the  only  \v(jrd.s  wkick  will  commu- 
nicate the  quality  of  negotiability.  Some  equivalent  words 
may  be  used.  AVords  in  a  bill,  from  which  it  can  be  in- 
ferred that  the  person  making  it,  or  any  other  party  to  it, 
intended  it  to  be  negotiable,  will  give  it  a  transferable  qual- 
ity against  that  person.  It  may  be  stated,  therefore,  that 
if  the  maker  of  a  note,  having  omitted  the  usual  words 
of  negotiability,  had  said,  '  this  is  and  shall  be  negotiable,' 
it  would  have  been  negotiable." 

SECTIOX  III. 

THE  SEVERAL  PARTS  OF  A  FOREIGN  BILL  CALLED  A  SET. 

§  64.  In  order  to  avoid  delay  and  inconvenience  which 
may  result  from  the  loss  or  miscarriage  of  a  foreign  bill, 
and  to  facilitate  and  expedite  its  transmission  for  accept- 
ance or  payment,  the  custom  has  prevailed  from  an  early 
period  for  the  drawer  to  draw  and  deliver  to  the  payee  sev- 
eral parts  of  the  same  bill  of  exchange,  which  may  he  for- 
warded by  different  conveyances,  and  any  one  of  them  being 
paid,  the  others  are  to  be  void.  These  several  parts  are 
called  a  set,  and  constitute  in  law  one  and  the  same  bill.'*" 
Sometimes  there  are  four,  but  usually  three  parts.'*^  And 
if  any  person  undertakes  to  draw  or  deliver  a  foreign  bill 
to  another  person,  it  seems  that  he  is  bound  to  deliver  the 
usual  number  of  parts,^''  and  it  has  been  thought  that  the 
promisee  may,  in  such  a  case,  demand  as  many  parts  as 
he  pleases,^*  but  this  is  questionable.^^ 

§65.  Condition  in  each  part  of  set. —  It  is  usual  for  the 
drawer,  and  to  his  protection  it  is  essential,  to  incorporate 
in  each  part  of  the  set  a  condition  that  it  shall  only  be 
payable  provided  the  other  remains  unpaid.     This  operates 

■»7Dani«"l  on  Negotiable  Instruments,  §   113;   Story  on   Bills.  S  G6. 
•4S  Daniel  on  Negotiable  Instruments,  §   113;   Story  on   Bills,  §  66, 
•»!>  Keamey  v.  West  Cranada  Mining  Co.,  1  H.  &  N.  412. 
soChitty  on  Bills  [*154].  178:  Byles  on  Bills  [*37G],  .556. 
51  Daniel  on  Negotiable  Instruments,   §   113:   Storv  on  Bills.  §   66. 


40  FORMAL    REQUISITES    OF    INSTRUMENTS.     §§  GO,  07. 

as  notice  to  the  world  that  all  the  parts  constitute  one  bill, 
and  if  drawee  pay  any  part,  thervvhole  is  extinguished.^" 

§  66.  Only  one  part  of  set  should  be  accepted. —  Tht; 
drawee  should  accept  but  one  part  of  the  set.  And  hav- 
ing accepted  one  part,  he  should  not  pay  another  part,  for 
he  would  still  be  liable  on  the  accepted  part.^^  When,  how- 
ever, he  pays  the  part  he  accepts,  the  whole  bill  is  extin- 
guished.^'* The  party  entitled  to  the  bill  should  claim  and 
hold  all  the  parts,  for  the  payment  of  any  one  part  to  an- 
other person  might  defeat  him.°^  But  he  to  whom  any  one 
part  of  the  set  is  first  transfeiTed  acquires  a  property  in 
all  the  other  parts,  and  may  maintain  trover  even  against 
a  bona  fide  holder,  who  subsequently,  by  transfer  or  other- 
wise, gets  possession  of  another  part  of  the  set.^"  For  it 
is  the  duty  of  the  person  taking  one  part  to  inquire  after 
the  others;  and  he  is  advertised  by  their  absence  that  they, 
or  one  of  them,  may  be  outstanding  in  the  hands  of  a 
prior  bona  fide  holder.^^  There  is  some  contrariety  of  opin- 
ion as  to  whether  the  plaintiff,  in  a  suit  against  drawer  or 
indorser,  must  produce  all  of  the  set  or  satisfactorily  ac- 
count for  their  nonproduction,  but  the  Supreme  Court  of 
the  United  States  has  held  that  it  is  sufficient  if  the  part 
protested  is  produced. ^^ 

SECTION  IV. 

STAMPS  UPON  NEGOTIABLE  INSTRUMENTS. 

§  67.  It  seems  that  stamp  duties  were  first  levied  on  the 
continent  of  Europe,  in  Holland,  in  the  year  1624,  being 
employed   to    raise    revenues   for   the    prosecution    of   war 

52  Daniel  on  Negotiable  Instruments,  §  114;  Ingraham  v.  Gibbs,  2 
Dall.   134. 

53  Holdsworth  v.  Hunter,  10  B.  &  C.  449;  Chitty  on  Bills  [*1.5.5],  178. 
54Holdsworth  v.  Hunter,  10  B.  &  C.  449;  Chitty  on  Bills  [*ir).5],  178. 
B5  Holdsworth  v.  Hunter,  10  B.  &  C.  449. 

MHoldsworth  v.  Hunter,  10  B.  &  C.  449;  Byles  on  Bills  [*376],  556. 
57  Lang  V.  Smyth,  7  Bing.  284,  294;  5  M.  &  P.  75. 
58Downes  v.  Church,  13  Pet.  205. 


§  68.  STAMPS    UrOX    .NKGOTIAHI.K    I.N.STJa-.MKNTS.  41 

against  Spain.^"  In  England,  they  were  Urst  imposed  in 
1094,  war  then  being  waged  against  France.'^'  In  the  United 
States,  individual  States  have  at  different  periods  imposed 
stamp  duties;  but  such  duties  were  never  imposed  by  the 
Federal  Govermnent  until  July  1,  18G2,  during  the  progress 
of  the  war  against  the  Confederate  States.  At  that  time,  a 
sweeping  act,  requiring  deeds,  bills,  notes,  checks,  and  other 
agreements  and  evidences  of  debt  to  be  stamped,  was  passed, 
being  framed  for  the  most  part  upon  the  model  of  the  Brit- 
ish statutes.  Subsequently  the  entire  act  was  repealed, 
and  from  the  date  of  the  said  repeal  there  was  no  statute 
of  the  United  States  requiring  a  stamp  upon  negotiable 
instruments  until  the  act  of  Congress  of  June  13,  1898. 

§  68.  Stamp  Act  of  1898. —  Ui)on  the  declaration  of  war 
with  Spain,  and  in  order  to  raise  the  increased  revenue 
needed  to  meet  the  exigencies  of  that  period,  the  Congress 
of  the  United  States  enacted  what  is  known  as  the  *'  War 
Revenue  Act,"  which  provided,  among  other  things,  for  the 
stamp  upon  bills  of  exchange,  foreign  and  inland,  promis- 
sory notes,  money  orders,  certificates  of  deposit,  warehouse 
receipts,  bills  of  lading,  and  quite  a  number  of  evidences 
of  indebtedness  not  herein  enmnerated.  Bills  of  ex- 
change if  drawn  singly  were  taxed  four  cents  for  each 
$100,  and  if  dra^Ti  in  two  sets,  two  cents  for  each 
$100.  Upon  promissory  notes,  the  same  stamp  duty  (in 
the  graduated  scale)  as  in  case  of  bills  of  exchange  was 
imposed,  while  upon  checks  a  two-cent  stamp  was  re- 
quired, w^ithout  regard  to  the  amount  specified  therein. 
Congress,  by  the  enactment  known  as  the  "  Revenue  Re- 
duction Law,"  approved  March  2,  1901,  repealed  so 
much  of  the  act  of  1898  as  required  stamp  taxes  upon 
checks,  certificates  of  deposit,  promissory  notes,  money  or- 
ders, bills  of  lading  and  warehouse  receipts,  leaving  bills 
of  exchange  subject  to  and  governed  by  the  provisions  of 
the  act  of  1898;  and  by  a  still  more  recent  statute,  ap- 
proved April  12,  1902,  the  stamp  tax  on  bills  of  exchange 
was  abolished. 


f^s>  Edwards  on  Stamp  Act.  2.  ««  Edwards  on  Stamp   Act.  .3. 


i2  FOKMAL    REQUISITES    OF    1^'STKUME^•TS.     gg  G'J,  70. 

SECTION  V. 

DELIVERY. 

§  69.  Delivery  is  the  final  step  necessary  to  perfect  the 
existence  of  any  written  contract;  and,  therefore,  as  long 
as  a  bill  or  note  remains  in  the  hands  of  the  drawer  or 
maker,  it  is  a  nullity.^^ 

So  essential  is  delivery  that  it  has  been  held  that  where 
a  promissory  note,  the  existence  of  which  was  unknown  to 
the  grantee,  lay  in  the  grantor's  possession,  and  was  found 
amongst  his  papers  after  death,  the  payee  could  not  claim 
or  sue  upon  it;'^"  and  though  such  a  note  should  be  found, 
accompanied  \dth  written  directions  to  deliver  it  to  the 
payee,  the  payee  vdW  still  have  no  right  of  action,  unless 
the  directions  be  valid  as  a  testament.*'^ 

Delivery  may  be  constructive  as  well  as  actual. 

A  direction  to  a  third  person,  who  is  in  actual  custody 
of  the  instrument,  to  hold  it  subject  to  the  payee's  or  trans- 
feree's order,  or  an  order  to  the  depositary  to  deliver  it, 
or  a  delivery  to  a  third  person  for  the  payee  without  con- 
dition is  sufficient  in  legal  contemplation.  In  either  of  the 
cases  suggested  the  deliverv^  would  be  constructive.*^ 

§  70.  Presumption  of  delivery. —  ^Vhenever  a  bill  or  note 
is  found  in  the  hands  of  the  payee,  it  will  be  presumed  that 
it  was  delivered  to  him,^^  and  that  the  delivery  took  place 
on  the  day  of  its  date,  if  it  be  dated,^^  and,  at  any  rate,  be- 
fore the  day  of  its  maturity.^"  But  the  presumption  both 
as  to  the  fact  and  the  time  of  delivery  may  be  rebutted.*^ 
As  a  bill  or  note  takes  effect  only  by  delivery,  so  it  takes 

eiDevries  v.  Shumate,  53  Md.  21G;  Purviance  v.  Jones,  120  Ind.  164. 

r.2Disher  v.  Disher,  1  P.  Wms.  204. 

esGough  V.  Findon,  7  Exeh.  48. 

64  Gordon  v.  Adams,  127  111.  225;  Howe  v.  Quid,  28  Gratt.  7. 

05Gris\vold  v.  Davis,  31  Vt.  390. 

w  Cranston  a-.  Goss,   107  Mass.  439;   Emery  v.  Vinall,  26  Me,  295. 

67  Smith  V.  McClure,  5  East,  477;  Dinney  v.  Plumley,  5  Vt.  500. 

08  Woodford  v.  Dorwin,  3  Vt.  82;   Seaife  v.  Byrd,  39  Ark.  568. 


j^  71,  DKhivKKv.  4:i 

eifect  only  on  delivery;  and  if  this  be  subsequent  to  its  date, 
it  will  be  binding  only  from  the  day  of  actual  deliver}'.""' 

If  the  bill  or  note  bear  no  date,  the  time  must  be  com- 
puted from  its  delivery;  and  if  the  day  of  actual  delivery 
cannot  be  proved,  it  will  be  computed  from  the  earliest  day 
on  which  it  appears  to  have  been  in  the  hands  of  the  payee 
or  any  holder.'*' 

§71.  Intention  essential. —  It  is  essential  to  delivery  that 
the  minds  of  both  parties  should  assent,  in  order  to  bind 
them;  and  if,  through  inattention,  intirmity,  or  other^vise, 
one  does  not  assent,  the  act  of  the  other  is  nugatory."^^ 
Therefore,  leaving  a  cheek  on  the  desk  of  a  clerk  of  a 
bank,  and  without  the  knowledge  of  such  clerk  or  of  an  offi- 
cer of  the  bank,  does  not  constitute  delivery.'^^  Where  pa- 
pers were  taken  up  in  the  presence  of  the  party  sought  to 
be  charged,  and  placed  in  the  safe  of  a  third  person,  it  was 
held  no  delivery  on  his  part,  as  between  the  immediate  par- 
ties, when  he  had  done  or  said  nothing  to  indicate  an  in- 
tention to  deliver."  A  bill  or  note,  as  well  as  a  deed, 
may  be  delivered  in  escrow — ^  that  is,  delivered  to  a  third 
party  to  hold  imtil  a  certain  event  happens  or  certain  con- 
ditions are  complied  with — and  then  the  liability  commences 
as  soon  as  the  event  happens  or  the  condition  is  fulfilled, 
without  actual  delivery  of  the  instrument. '^^  But  there  is 
this  distinction  between  negotiable  and  sealed  instruments: 
If  the  custodian  of  the  former  betrays  his  trust,  and  passes 
off  the  negotiable  instrument  to  a  bona  fide  holder  before 
maturity,  and  M'ithout  notice,  all  parties  are  bound;  but  if 
the  instrument  be  sealed,  the  rule  is  other\\ase.'^^ 

•!9Ix)vejoy  V.  Whipple,   18  Vt.   379. 

"0  Clark  v.  Sigourncy.  17  Conn,  oil;  lliehardson  v.  Lincoln.  ">  Mete. 
(Mass.)    201. 

'1  Daniel   on  Negotiable   Instruments.   §   G7. 

T2Chicopee  Bank  v.  Philadelphia  Bank,  8  Wall.  041;  Kinney  v.  Ford, 
52  Barb.   194. 

"3  Stokes  V.  Anderson,  118  Ind.  .5.3.3. 

74  Daniel  on  Negotiable  Instruments.  §  G8 ;  Taylor  v.  Thomas,  13 
Kan.   217. 

75  Daniel  on  Negotiable  Instruments,  §   68. 


CHAPTER  IV. 

THE   ESSENTIAL  REQUISITES  OF  NEGOTIABLE  INSTRU- 

riENTS. 

§  72.  A  negotiable  instrument  must  carry  its  full  history 
upon  its  face  and  embrace  the  following  requisites:  First. 
It  musi  be  open,  that  is,  unsealed.  Second.  The  engage- 
ment to  pay  must  be  certain.  Third.  The  fact  of  pay- 
ment must  be  certain.  Fourth.  The  amount  to  be  paid  must 
be  certain.    Fifth.  The  medium  of  payment  must  be  money. ^ 

SECTION  I. 

THE    TAPER    MUST    BE    OrEN THAT    IS    UNSEALED. 

§  73.  What  is  an  unsealed   obligation;  effect  of  seal  on  ne- 
gotiability.—  By  the  term  "open"  is  meant  "unsealed;" 
and  though  the  instrument  possesses  all  the  other  requisites 
of  a  bill  or  note,  its  character  as  a  commercial  instrument  is 
destroyed,  and  it  becomes  a  covenant,  governed  by  the  rules 
affecting  commondaw  securities,  if  it  be  sealed.^     It  is  to 
be    observed,    however,    that    merely    attaching    a    seal    to 
the  signature  does  not  make  it  a  specialty  contract,  unless 
there  be  a  recognition  of  the  seal  in  the  body  of  the  in- 
strimient  by  some  such  phrase  as  "  witness  my  signature 
and  seal,"  or  "  signed  and  sealed,"  for  otherwise  the  door 
would  be  thrown  open  to  frauds  and  forgeries,  by  the  facil- 
ity with  which  seals  could  be  superadded.^     And  it  seems 
to  be  established  l)y  Avell  considered  cases  that  coi-porations 
cannot  use  the  seal  without  destroying  the  negotiable  char- 
acter  of   the   instrument,   although  the   decisions   are   not 
uniform.* 

1  Danifl  on  Xefroiiable  Instruments,  §  30. 

2  Daniel  on  Xepotialile  Instruments,  §  31;   Story  on  Bills,  §  02. 

3  Anderson  v.  Bullock,  4  Munf.  442;   Humphries  v.  Nix,  77  Ga.  98. 

4  Daniel  on  Negotiable  Instruments,  §  32.     See  also  §  146,  post,  and 
authorities  there  cited. 

[441 


§§  74,  75.   CKRTAINTY  AS  TO  ENGAGEMENT  TO  PAY.       45 

§  74.  Statutes  as  to  sealed  instruments. —  In  some  of  the 
States  of  the  United  States,  sealed  instruments  for  the  pay- 
ment of  money  are  placed  by  statute  upon  the  same  footing 
as  bills  and  notes  in  respect  to  their  negotiability;  and  the 
addition  of  a  seal  to  a  bill  or  note  payable  to  order  or  bearer 
in  no  way  impairs  its  negotiability. 

In  others,  bonds  are  made  transferable,  and  may  be  sued 
upon  in  the  name  of  the  assignee,  but  the  latter  takes  them 
subject  to  all  defenses  that  were  available  to  the  original 
obligee.^ 

SECTION  II. 

CERTAINTY  AS   TO  ENGAGEMENT  TO   PAY. 

§  75.  Meaning  of  the  requirement. —  If  a  bill,  it  must  con- 
tain a  certain  direction  to  pay  — if  a  note,  a  certain  promise 
to  pay.  A  bill  is,  in  its  nature,  the.  demanding  of  a  right, 
not  the  mere  asking  of  a  favor,  and  therefore  a  supplica- 
tion made  or  authority  given  to  pay  an  amount  is  not  a 
bill.  The  language,  "  Mr.  Little,  please  let  the  bearer  have 
£7,  and  place  it  to  my  account,  and  you  will  much  oblige 
your  humble  servant,"  was  held  not  a  bill;*^  and  so  "  Please 
to  send  £10  by  bearer,  as  I  am  so  ill  I  cannot  wait  upon 
you;"'^  but  on  the  other  hand  where  the  language  was: 
"  Mr.  Nelson  will  much  oblige  Mr.  Webb  by  paying  T.  Ruff, 
or  order,  on  his  account,  twenty  guineas,"  it  was  held  to  im- 
port an  order,  and  therefore  a  good  bill.®  The  usual  and 
appropriate  expression  used  in  bills  is,  "  Please  pay,"  and 
it  has  been  well  said  by  Justice  Stoiy  that  the  language 
should  not  be  too  nicely  scanned  nor  be  regarded  because 
of  its  politeness  as  asking  a  favor  rather  than  demanding 
a  right.^  It  is  a  perfectly  valid  phrase,  being  a  mere  form 
of  civility.^^     "Please  let  the  bearer  have  $50;  I  mil  ar- 

c  Daniel  on  Negotiable  Instruments,   §   33. 
0  Little  V.  Slackford,   1  Moody  &  M.  371. 

7  King  V.  Ellor,   1  Leach  Cr.  Law,  323. 

8  Ruff  V.   Webb,   1   Esp.   129. 

9  Story  on  Bills,  §  33. 

lOWheatley  v.  Strobe,  12  Cal.  92;  Jarvis  v.  Wilson,  46  Conn.  90. 


46  ESSENTIAL    REQUISITES    OF    IJs'STKUMENTS.  §  7G, 

range  it  with  you  tliis  forenoon,"  and  signed,  "  yours,  most 
obedient,"  was  held  sutticient  in  Kentueky.^^ 

§  76.  Certainty  of  promise  in  a  note. —  A  promissory  note 
must  contain  a  certain  promise  to  pay.  ' ''  I  promise  to  pay, 
or  cause  to  be  paid,"  would  suffice,  because  the  undertaking 
that  the  payment  be  made  is  definite  and  certain.^^  It  is 
said  by  Story,  that  "  it  seems  that  to  constitute  a,  good  prom- 
issory note,  there  must  be  an  express  promise  upon  the  face 
of  the  instrument  to  pay  the  money;  for  a  mere  promise 
implied  by  law,  founded  upon  an  acknowledged  indebted- 
ness, ^\'ill  not  be  sufficient."  "  But  we  think  the  better  lan- 
guage is  used  by  Byles,  Avho  says:  "No  precise  words  of 
contract  are  necessary,  provided  they  amount,  in  legal  effect, 
to  a  promise  to  pay."  ^^  In  other  words,  if  over  and  above 
the  mere' acknowledgment  of  debt,  there  may  be  collected 
from  the  Avords  used  a  promise  to  pay  it,  the  instrument 
may  be  regarded  as  a  promissory  note.^^ 

In  England,  it  seems  to  be  well  settled  that  an  ordinary 
due-bill  does  not  amount  to  a  promissory  note,  while  in  the 
United  States  the  decisions  are  conflicting.-'^  When  nego- 
tiable words,  however,  are  inserted  in  the  due-bill,  or  it 
contains  the  words  "  on  demand,"  the  instrument  is  gener- 
ally held  to  be  a  promissory  note.'"^ 

SECTIO^T  III. 

CERTAINTY    AS    TO    FACT    OF    PAYMENT. 

§  77.  Fact  of  payment  must  be  certain. —  The  instrument 
must  be  payable  unconditionally  and  at  all  events  in  order 
to  be  negotiable. 

11  Brosenthal  v.  Williams,   1  Duv.  .329. 

i^Lovell  V.  Hill,  6  Car.  &  P.  2.38:  Caviness  v.  Rushton,  101  Ind.  .500. 

13  Story  on  Promissory  Notes,  §  14. 

14  Byles  on  Bills,  8. 

15  Daniel  on  Negotiable  Instruments,  §  36;  Cowan  v.  Hallack,  9  Colo. 
578. 

16  Daniel  on  Negotiable  Instruments,   §  3f5a. 

IT.Jobnson  Sf^hool  Township  v.  Citizens'  Bank,  81  Ind.  515;  Smith  v. 
Allen,  5  Day,  337. 


§  78.  CERTAINTY    AS    TO    FACT    OF    PAYMENT.  47 

If  the  order  or  promise  be  payable  provided  terms  men- 
tioned are  complied  with;  as,  for  instance,  that  a  railroad 
be  built  to  a  certain  point  by  a  certain  time,  it  is  not  a 
bill  or  note;^'^  and  likewise  if  payable  provided  a  certain 
act  be  not  done;^''  or  that  a  certain  receipt  be  produced ;^^ 
or  another  person  shall  not  i)reviously  pay;"^  or  provided  a 
certain  ship  shall  arrive;'*^"  or  ])n)vidcd  the  maker  shall  be 
able;"^  or  provided  the  nuiker  shall  live  a  certain  time;""*  or 
"  On  account  of  contract  when  completed  and  satisfac- 
tory;" ^^  or  provided  one  person  shall  first  pay  another  a  cer- 
tain sum,""  or  upon  any  contingency.^^ 

The  form  or  language  used  to  give  expression  to  the  con- 
ditions is  immaterial,  /.  e. —  "  When  A.  shall  marry,"  ^^  or 
"  after  arrival  and  discharge  of  coal  by  Brig  A."  "'•*  In  all 
these  cases  the  contingency  imjilied  deprives  the  instrument 
of  its  negotiable  character,  as  the  events  named  may  never 
happen.  If  payable  in  instalments,  no  time  for  the  pay- 
ment of  the  instalments  being  mentioned,  it  is  not  a  ])rom- 
issory  note.^'^  In  Illinois,  where  the  promise  was  to  pay 
a  railroad  company  or  order  a  certain  sum,  in  such  instal- 
ments and  at  such  times  as  the  directors  of  the  payee  com- 
pany might  assess  or  require,  it  was  held  negotiable,  and  in 
effect  payable  on  demand,  or  in  instalments  on  demand. ^^ 

^  78.  Time  need  not  be  definitely  ascertainable,  if  sure  to 
come. —  If  the  time  must  certainly  come,  although  the  par- 
ticular day  is  not  mentioned,  the  instiniment  is  regarded  as 

18  Blacknian  v.  Lehman.  fi3  Ala.  547 ;   Eldrcd  v.  Malloy,  2  Colo.  320. 

19  Appleby  v.   Beddolph,   8  Mod.  363. 

20  Mason  V.  Metcalf,  8  Baxt.  440. 

21  Roberts  v.  Peake,  1   Burr.  323. 
22Coolidge  V.  Rujio;les,  15  Mass.  387. 
2-.  Salinas  v.  Wrijrht.  11  Tox.  572. 

24  Braham  v.  Biibb,  Chitty  on  Bills  [*13r)],  136. 

25  Home  Bank  v.  Dnim<]rolle,  15  X.  E.  Rep.  747. 
20  Chapman  v.  Wright,  79  Me.  595. 

27  Sloan  V.  McCarty,   134  Mass.  245. 

28  Pearson  v.  Garrett,  4  Mod.  242. 

29  Grant  v.  Wood,  12  Gray,  220. 
SOAIofTatt  V.  Edwards,  Car.  &  M.   16. 
31  White  V.  Smith,   77  111.  351. 


48  ESSENTIAL.    REQUISITES    OF    INSTRUMENTS.  §79. 

negotiable,  as  the  fact  of  payment  is  certain.^-  If  the  in- 
stnmient  i^^  payable  at,  or  \\ithin  a  certain  tinie  after,  a 
man's  death,  it  is  sufticient,  because  the  event  must  occur ;^'^ 
and  a  i)romise  to  pay  "  on  demand,  after  my  decease,  $850," 
signed  by  the  ])roniisor,  is  a  good  note,  negotiable  as  any 
other,  and  binding  on  the  promisor's  estate  at  his  death.^^ 
So  a  note  payable  "  one  day  after  date  or  at  my  death,"  ^^ 
and  if  the  day  of  payment  must  come  at  the  same  time, 
it  has  been  said  that  the  distance  is  immaterial.^^  The 
English  courts  have  gone  so  far  as  to  hold  that  if  payable  at 
a  certain  time  after  a  government  ship  is  paid  off,  it  would 
be  good,  because  government  is  sure  to  pay;^^  but  this  de- 
cision has  been  justly  criticized  and  distrusted.^^ 

In  Massachusetts,  held  that  a  note  payable  "  as  soon  as 
realized,  to  be  paid  in  the  course  of  the  season  now  coming," 
is  negotiable,  for,  whatever  time  may  be  understood  by  the 
''  coining  season,"  whether  harvest  time  or  the  coming  year, 
it  must  come  by  mere  lapse  of  time  and  that  must  be  the 
ultimate  limit  of  the  time  of  payment.^^ 

§  79.  Rule  liberally  interpreted  in  favor  of  negotiability — 
The  tendency  of  the  courts  is  to  liberally  construe  lan- 
guage used,  in  favoi*  of  upholding  the  negotiability  of  the 
instrument,  and  hence  in  many  cases,  especially  in  the 
United  States,  apparent  uncertainty  of  time  has  been  ren- 
dered certain  by  giving  to  the  debtor  a  reasonable  time  there- 
after (the  time  prescribed)  to  make  the  payment.  Illus- 
trations: 

A  note  payable  on  demand  after  date,  "  when  convenient," 
has  been  held  payable  absolutely  in  a   reasonable   time;**^ 

32  Daniel  on  Negotiablp  Instruments,  §  43. 

33  Cooke  V.  Colehan,  2  Stra.  1217;  Conn  v.  Thornton,  46  Ala.  .'SST ; 
Price  V.  Jones,  105  Tnd.  ,544. 

34  Bristol  V.  Warner,  19  Con'n.  7. 

35  Conn  V.  Thornton,  40  Ala.  588. 
30  Worth  V.  Case,  42  N.  Y.  .362. 

37  Andrews  v.  Franklin,  1  Stra.  24;  Evans  v.  TTnderwood,  1  Wils.  262. 

38  1  Parsons  on  Notes  and  Bills,  40;   Edwards  on  Bills,  142. 
39Cota  V.  Buck,  7  Mete.   (Mass.)  ,588. 

40  Works  V.  Hershey,  35  Iowa,  340. 


§  80.  CERTA 1 N  1' V     AS    TO    FACT    Ol      I'A  Y.M  K.\  r.  49 

and  so  a  note  payable  ''  as  soon  as  I  can."  ■*'  So  a  note 
payable  in  six  months,  "  or  as  soon  as  I  can  with  due  dili- 
gence make  the  money  out  of  said  patent  right;  "  *^  a  note 
payable  in  nine  months,  *'  or  as  A.'s  horse  earns  the  money  in 
the  cavalry  service;  "  ■*'  a  note  payable  twelve  months  after 
date,  "  or  sooner  if  made  out  of  a  certain  sale,"  ^  have  each 
been  held  to  be  a  valid,  negotiable  note  livable  ab.^olutely  at 
the  termination  of  the  time  expressed,  and  earlier,  provided 
the  alternative  event  transpired.  A  nctte  payable  "from 
the  avails  of  logs  bought  of  M.  M.,  when  there  is  a  sale 
made;  " '*^  or  "when  I  sell  my  ])hu'e  where  I  now  live,"  ^"^ 
have  been  held  in  Maine  payable  absolutely  after  a  reason- 
able time. 

§  80.  Cases  arising  out  of  Confederate  War. —  During  the 
war  between  the  United  States  and  the  Confederate  States, 
obligations  were  frequently  given,  payable  when,  or  a  cer- 
tain time  after,  peace  should  be  declared.  Where  a  note 
was  expressed  to  be  payable  "  six  months  after  peace  is  de- 
clared between  the  United  States  and  the  Confederate  States 
of  America,"  it  was  held  actionable  six  months  after  peace 
€nsued.^'  And  the  like  ruling  prevailed  as  to  a  note  pay- 
able "  thirty  days  after  peace  between  the  Confederate 
States  and  the  United  States,"  ■***  and  as  to  a  note  payable 
'*  one  day  after  the  treaty  of  peace."  ^^  But  in  West  Vir- 
ginia, where  a  bond  was  payable  "  six  months  after  the 
ratification  of  peace  between  the  United  States  and  Con- 
federate States,"  it  seems  to  have  been  regarded  as  a  wager 
upon  the  success  of  the  Confederacy;  but  the  case  went  off 


41  Kincard  v.  Higgins,  1  Bibb.  396. 

•J2  Palmer  v.  Hummer,   10  Kan.  464. 

■I"  Gardner  v.  Barger,  4  Ileisk.  669. 

^4  Ernst  V.  Stockman,  74  Pa.  St.   13;  Charlton  v.  Reed,  61  Iowa,  166. 

■»5  Sears  v.  Wright,  24  Me.  278. 

4C  Crocker  v.  Holmes,  6.5  Me.  195. 

•17  Brewster  v.  Williams,  2  S.  C.  455. 

48  Mortee  v.  Edwards,  20  La.  Ann.  236. 

-to  Gaines   v.   Dorsett,   18  La.  Ann.   563. 


50  ESSEXTIAI.    REQUISITES    OF    INSTRUMENTS.  §  SI. 

on  a  formal  point.^*^  In  North  Carolina,  this  view  has  been 
adopted  and  applied,^^  and  certainly  is  not  without  force. 
Only  the  United  States  Senate  can  ratify  a  peace,  and  a 
peace  Ratified  between  two  conntries  implies  the  indepen- 
dence of  each.  And  further,  it  may  be  said  that  until  the 
condition  precedent  is  fulfilled,  no  liability  accrues.  We 
think  the  better  view  is  that  *'  six  months  after  peace  " 
would  fulfill  the  meaning  of  the  terms  as  they  were  used 
in  the  country,  though  they  are  the  very  words  of  Confed- 
erate treasury  notes;  and  it  has  been  so  decided  in  a  num- 
ber of  cases,  the  courts  construing  the  language  according 
to  its  popular  import,  and  the  probable  intention  of  the 
parties,  rather  than  in  its  strict  technical  sense. ^" 

;^  81.  Where  payable  out  of  a  particular  fund,  not  nego- 
tiable.— •  In  accordance  mth  these  principles  the  negotiable 
character  of  the  instrument  is  destroyed  if  i.  be  made  pay- 
able expressly  or  impliedly  out  of  a  particular  fund.  Illus- 
trations: The  insertion  in  an  order  to  pay  a  certain  sum 
"  on  account  of  brick  work  done  on  a  certain  building  "  ""^ 
or  "  out  of  rents,"  ^^  or  "  out  of  my  growing  substance,"  ^"^ 
or  "  out  of  a  certain  claim,"  ^°  or  '^  out  of  my  part  of  the 
estate  of  A.,"  ^^  or  "'  out  of  amount  due  on  contract."  '** 
On  the  same  principle,  receivers'  certificates  are  not  regarded 
as  negotiable,  although  framed  with  the  negotiable  words 
usual  in  promissory  notes.^'"^ 

50  Harris  v.  Lewis,   5  W.  Va.  576. 

51  ^MoNinch  v.  Ramsey,  66  N.  C.  229. 

52  Knight  V.  McReynolds,  37  Tex.  204;  Mortee  v.  Edwards,  20  La. 
Ann.  236;   Nelson  v.  Manning,  53  Ala.  549. 

53  Pitman  V.   Crawford,  3  Gratt.   127. 

54  1   Parsons  on  Notes  and  Bills.  43. 
55,Josselyn  v.  Lacier,  10  Mod.  294. 

5(5  Richardson  v.  Carpenter,  40  N.  Y.  661. 
57  Mills  V.  Kuykendale,  2  Blackf.  47. 
58Hoagland  v.  Erck,  11   Neb.  580. 

?9  Staunton  v.  Railroad  Co.,  31  Fed.  587;  McCurdy  v.  Bowes,  88  Ind. 
583. 


§§  82,  83.        CERTAINTY  AS    TO    AMOUNT    TO    BE    PAID.  51 

SECTION  IV. 

CERTAINTY    AS    TO    AMOUNT   TO   BE   PAID. 

§  82.  Amount  must  be  in  figures  or  written  out  or  ascer- 
tainable from  the  instrument. —  The  amount  which  the  debtor 
promises  or  cii^aji,es  to  pay  must  either  be  stated  in  the  in- 
strument itself,  in  figures  or  words,  or  must  be  ascer- 
tainable from  data  somewhere  on  the  paper.  Illustra- 
tions: A  note  to  pay  a  certain  sum,  "and  all  other  sums 
which  may  be  due  "  is  not  negotiable,  as  the  aggregate 
amount  is  not  capable  of  definite  ascertainment.*^  So,  if  it 
be  for  a  certain  sum  "  and  whatever  sum  you  may  collect 
of  me  for  C. ;  "  *^  or  if  it  be  for  "  the  proceeds  of  a  ship- 
ment of  goods,  value  about  £2,000,  consigned  by  me  to 
you;  "  ^^  or  "  the  demands  of  the  sick  club  in  part  of  in- 
terest; "  ^^  or  "  a  certain  sum,  the  same  to  go  as  a  set-off;  "  ^ 
or  if  it  be  expressed,  "  deducting  all  advances  and  expen- 
ses; "  ^  or  if  it  be  for  "  $800  and  such  additional  premium 
as  may  be  due  on  policy  No.  218,171."  *^  But  a  promise 
to  pay  bearer  a  certain  sum  per  acre  for  so  many  acres  as 
a  certain  tract  contained  was  held  to  be  negotiable  as  soon 
as  the  number  of  acres  was  indorsed  upon  it.*'^ 

§  83.  Payable  with  exchange  does  not  destroy  negotiability. 
—  While  the  authorities  are  not  uniform,  it  may  be  safely 
stated  to  be  fairly  well  settled  that  if  there  be  added  to  the 
amount,  "  with,  exchange,"  or  "  with  current  exchange  on 
another  place,"  the  commercial  character  of  the  paper  is 

GO  Smith  V.  Xightingale,  2  Stark.   375. 

Cl  Legro  v.  Staples.  IG  Me.  2.")2;  Lime  Rock  F.  &  M.  Ins.  Co.  v.  Hewitt, 
CO  Me.  407. 

63  Jones  V.  Simpson,  2  B.  &  C.  318. 
••3  Bolton  V.  Dugdale,  4  B.  &  Ad.  G19. 

64  Clarke  v.  Percival,  2  B.  &  Ad.   600. 
65Cashnian  v.  Haynes,  20  Pick.  132. 
66Marrct  v.  Equitable  Ins.  Co.,  54  Me.  537. 
67  Smith  V.  CloptoTi,  4  Tex.  109. 


52  ESSENTIAL    KEQLISITKS    OK    IXSTKU  MEATS.       §g  84,  85. 

not  impaired,  as  that  is  capable  of  definite  ascertainment.'* 
Exchange  is  an  incident  to  the  use  of  negotiable  instruments 
for  the  transmission  of  money  from  place  to  place,  and  its 
nature  and  effect  are  well  understood  in  the  commercial 
world.  Exchange  preserves  the  equivalence  of  amounts  u, 
value,  and  does  not  introduce  such  an  element  of  uncertainty 
as  destroys  the  negotiability  of  the  instrument  which  em- 
bodies it  in  \t<  tenns.^^ 

§  84.  Stipulation  to  pay  attorney's  fees. —  Quite  frequently 
in  recent  years  bills  and  notes  are  met  "w-ith  framed  in  other 
respects  in  the  usual  negotiable  forms,  but  containing  the 
additional  stipulation  on  the  part  of  the  drawer  or  maker 
to  pay  collection  or  attorney's  fees,  and  they  have  elicited 
from  the  courts  various  and  conflicting  decisions.  The  cases 
may  be  divided  into  four  classes. 

First.  Those  which  sustain  both  the  validity  of  the  stipu- 
lation and  the  negotial)ility  of  the  instrument."^ 

Second.  Those  which  enforce  the  stipulation,  but  deny 
the  negotiability  of  the  instrument.^^ 

Third.  The  class  that  upholds  the  negotiability  of  the  in- 
strument, but  regards  the  stipulation  as  penal  and  void.^" 

Fourth.  Those  which  adhere  to  the  view  that  the  stipu- 
lation to  pay  the  additional  amount  renders  the  transaction 
usurious,  and  subjects  the  instrument  to  the  operation  of  the 
statutes  against  usury.*^^ 

§  85.  Correct  view. —  Such  instruments  should,  we  think, 
be  upheld  as  negotiable.  They  are  not  like  contracts  to 
pay  money  and  do  some  other  thing.  They  are  simply  for 
the  payment  of  a  certain  sum  of  money  at  a  certain  time, 
and   the   additional   stipulations   as  to    attorney's  fees  can 

68  Daniel  on  Negotiable  Instruments,  §  54 ;   Grutacup  v.  Woulloise,  2 
McLean,  581  :   Johnson  v.  Frisbie,  15  Mich.  286. 
09  Smith  V.  Kendall,  0  Mich.  242. 

70  Schlosinper  v.  Arline,  .31  Fed.  648;   Sperry  v.  Horr,  32  Iowa,   184. 

71  Woods  V.  North,  84  Pa.  St.  410:  First  Nat.  Bank  v.  Gay,  71  Mo. 
627. 

72  Wright  V.  Travers,  73  :Mich.  404;  Gaar  v.  Louisville  Banking  Co., 
11   Bush,   182. 

73  State  V.  Taylor,  10  Oliio,  378;  Dow  v.  Updike,  11  Nebr.  05. 


§  so.         CERTAl.NTY   AS   TO    TUK    MKIMLM    (JK    TAYMLNT.  j'-i 

never  go  into  etlec't  if  the  terms  oi  tlie  bill  or  note  are  com- 
plied with.  They  are,  therefore,  incidental  and  ancillai-y  to 
the  main  engagement,  intended  to  assure  its  performance^ 
or  to  compensate  for  trouble  and  expense  entailed  by  its 
breach.  At  maturity,  negotiable  paper  ceases  to  be  nego- 
tiable in  the  full  commercial  sense  of  the  tenn,  though  it 
still  passes  from  hand  to  hand  by  the  negotiable  forms  of 
transfer;  and  it  seems  paradoxical  to  hold  that  instruments 
evidently  framed  as  bills  and  notes  are  not  negotiable  during 
their  currency  because  when  they  cease  to  be  current  they 
contain  a  stipulation  to  defray  the  expenses  of  collection.'* 
But  whatever  may  be  said  for  and  against  the  negotiability 
of  an  instrument  containing  a  provision  ''  with  reasonable 
attorney's  fees,"  it  would  seem  that  if  the  amount  is  fixed 
by  a  certain  percentage  or  a  certain  sum,  the  objection  either 
to  the  negotiability  or  validity  of  the  paper  would  be  ex- 
tremely technical,  if  not  untenable. 

SECTIOX  V. 

CERTAINTY    AS    TO    TUE    ilEDIUM    OF    PAYilENT,    WHICH    ilUST    BE 
ONLY  IN  MONEY. 

§  86.  Medium  of  payment  must  be  money. —  It  is  indis- 
pensably recpiisite,  in  order  to  constitute  a  bill  of  exchange 
or  negotiable  promissory  note,  that  the  direction  or  promise 
be  to  pay  in  money. ^^  And  if  the  instrument  be  expressed 
to  be  payable  "  in  cash  or  specific  articles,"  in  the  alterna- 
tive,"*' or  in  merchandise,  as,  for  instance,  "  in  good  mer- 
chantable whisky  at  trade  price,"  ""  or  "  in  ginned  cotton 
at  eight  cents  per  pound,"  ^^  or  '"  in  work,"  '^  or  in  any 
other  article  than  money,**^  as,  for  instance,  "  an  ounce  of 

74 Daniel  on  Xegotiable  Instruments,  §  62a;  Benjamin's  Chalmers' 
Digest,   17. 

T-Thitty  on  Bills   [*132],  1.53. 

7*5  ^fatl hews  v.  Houghton,  2  Fairfax.  377. 

"Rhodes  V.  Lindlpy.  Ohio  Cond.  465;   Chitty  on  Bill-;   r*l-'^21. 

78  Lawrence  v.  Dougherty.  .')  Yerg.  43.5. 

7nQuinihy  v.  Merritt,  11  Humphr.  439. 

SO  Auerbach  v.  Prichett,  58  Ala.  451;  McClellan  v.  Coffin,  93  Ind.  456. 


54:  ESSENTIAL    REQUISITES    OF    INSTRUMENTS.    §§  87-89. 

gold,"  ^^  it  becomes  a  special  contract,  and  by  the  law  mer- 
chant loses  its  character  as  commercial  paper. 

§  87.  Legal  tender Strictly    speaking,    the    instrument 

must  be  payable  in  legal  tender,  and  hence  a  note  payable 
in  ''  cm-rent  bank  bills  or  notes,"  ^^  or  "  office  notes  of  a 
bank,"  ^^  or  "  in  currency,"  ^*  is  not  negotiable. 

If  payable  in  "  good  current  money "  or  "  current 
money,"  the  words  thus  employed  have  been  construed  to 
mean  legal  tender  money.^^ 

§  88.  It  is  not  necessary,  however,  that  the  money  should 
be  that  current  in  the  place  of  payment,  or  where  the  biU 
is  dra^v^l;  it  may  be  in  the  money  of  any  country  whatever.^*" 
But  it  has  been  held  that  it  is  necessary  that  the  instrument 
should  express  the  specific  denomination  of  money  when  it 
is  payable  in  the  money  of  a  foreign  country,  in  order  that 
the  courts  may  be  able  to  ascertain  its  equivalent  value; 
othei-ise  it  is  not  negotiable,®'^  but  such  a  requirement  does 
not  seem  to  be  consonant  with  sound  principle. 

Intention,  to  be  gathered  from  the  face  of  the  paper,  ac- 
'Cording  to  fixed  rules,  is  the  test  of  negotiability,  and  we 
do  not  see  how  the  idea  of  its  possessing  a  negotiable  quality 
is  excluded  by  the  mere  fact  that  the  denomination  of  for- 
eign money  is  not  set  out.  A  case,  remarkable  for  its  learn- 
ing and  ability,  decided  by  the  Supreme  Court  of  Michigan, 
ladopts  this  view ;  and  there  it  has  been  held  that  a  note  pay- 
:able  "  in  Canada  currency  "  is  negotiable,  the  terms  being 
equivalent  to  Canada  money.®* 

§  89.  Contract  must  be  only  for  the  payment  of  money. — 
It  is  essential  to  the  negotiability  of  the  bill  or  note  that 

SI  Roberts  v.  Smith,  58  Vt.  494. 

82MeCormick  v.  Trotter,  10  Serg.  &  R.  94. 

«3  Irvine  v.  Lowry,  14  Pet.  29.3. 

84  Haddock  v.  Woods,  4G  Iowa,  433 ;  Johnson  v.  Henderson,  76  N.  C. 
■227. 

8B  Wharton  v.  Morris,  1  Dall.  124;  Daniel  on  Negotiable  Instruments, 
5   56. 

86  King  V.  Hamilton,  12  Fed.  478;  Thompson  v.  Sloan,  23  Wend.  71. 

87  Thompson  v.  Sloan,  23  Wend.  71. 

88  Black  V.  Ward,  27  Mich.  193. 


§  89.       CERTAINTY    AS    To    TllK    MEDIUM    OF    TAYMENT.  55 

it  purport  to  be  oiily  for  the  puymeiit  of  money.  Such  at 
least  may  be  stated  to  be  the  general  rule,  for  if  any  other 
agreement  of  a  ditferent  character  be  engrafted  upon  it,  it 
becomes  a  special  contract  clogged  and  involved  with  other 
matters,  and  has  been  deemed  to  lose  thereby  its  character 
as  a  conunercial  instrument.^"  In  accordance  with  this  gen- 
oral  rule  it  has  been  held  that  a  note  or  a  certain  amount 
given  for  the  hire  of  a  negro,  to  which  is  added,  "  said 
negro  to  be  funiished  Anth  the  usual  (juantity  of  clothing," 
was  not  a  negotiable  promissory  note,  but  a  special  contract 
for  the  hiring  and  clothing  of  the  negro.®*^  Aiid  this  would 
seem  to  be  the  correct  doctnne,  though  the  view  has  been 
taken  that  such  a  paper  is  negotiable,  the  obligation  to  pay 
the  money  only  passing  to  an  indorsee.^^  So  it  has  been 
held  that  if  the  instrument  be  to  pay  money,  and  also  "  to 
deliver  up  horses  and  a  wdiarf ;  "  "'  or  to  pay  money  "  and 
take  up  a  certain  outstanding  note,"  °^  it  is  not  a  negotiable 
note. 

S9  Fletcher  v.  Thompson,  55  N.  H.  308;  Ingham  v.  Dudley,  60  Iowa,  16. 
»o  Barnes  v.  Gorman,  9  Rich.  297. 

91  Baxter  v.  Stewart,  4  Sneed,  213;  Gaines  v.  Shelton,  47  Ala.  413. 

92  Martin  v.  Chauntry.  2  Stra.  1271. 
»3Cook  V.  Satterlee,  6  Cow.  108. 


CHAPTER  Y. 

CONSIDERATION  OF  NEGOTIABLE  INSTRUMENTS. 

§  90.  By  consideration,  is  meant  a  benefit  or  gain  of  some 
kind  to  the  party  making  the  promise,  or  a  loss  or  injury 
of  some  kind  to  the  party  to  whom  it  is  made.  By  the 
common  law  a  promise  made  mthout  consideration  was  in- 
valid, and  in  order  to  enforce  any  contract  it  was  necessary 
to  aver  and  prove  a  consideration. 

The  most  ancient  exception  to  this  rule  was  made  in 
reference  to  promises  under  seal,  the  solemn  act  of  the  party 
in  attaching  a  seal  to  the  e\adence  of  his  contract  being  re- 
garded as  importing  a  consideration  and  estopping  him  from 
denying  it.  The  necessities  of  trade  soon  produced  another 
relaxation  of  the  rule;  and  by  the  usage  and  custom  of 
merchants,  bills  of  exchange  and  promissory  notes  came  to 
be  regarded  as  prima  facie  evidences  of  consideration;  and 
peculiar  qualities  were  accorded  to  them  which  were  pos- 
sessed by  no  other  securities  for  debt.  These  qualities,  so 
far  as  they  relate  to  the  consideration  of  such  instruments,. 
we  propose  now  to  discuss.^ 

SECTION  I. 

C02\"SIDERATI0N  PRESUMED. 

§  91.  Difference  between  negotiable  and  nonnegotiable  con- 
tracts.—  There  is  no  doubt  that  if  the  instrument  sued  on 
be  negotiable,  it  is  imnecessary  to  aver  or  prove  considera- 
tion, for  it  is  imported  and  presumed  from  the  fact  that  it 
is  a  negotiable  instrument.^  But  if  the  paper  does  not 
possess  the  quality  of  negotiability,  it  does  not,  per  se,  im- 
port a  consideration  and  it  must  be  averred  and  proved, 
unless  it  be  stated  on  its  face  that  it  was  given  for  "  value 

1  Daniel  on  Negotiable  Instruments,   §    160. 

2  Daniel  on  Negotiable  Instruments,  §  161;  Averett's  Admr.  v.  Booker, 
15  Gratt.  169;  Louisville  R.  Co.  v.  Caldwell,  98  Ind.  251. 

[56] 


§§  1)2,  \)'i.        iiOOl)    AM)     \AM  AUI.K    CO.NSIDKKA'l  IONS.  57 

received,"  or  contains  some  other  et^nivalent  expression, 
in  which  case  it  would  be  prima  facie  evidence  of  considera- 
tion.^ 

§  92.  At  common  law  an  action  of  deht  cannot  be  sus- 
tained upon  a  promissory  note,  as  of  itself  importing  a  debt, 
but  the  plaintiff  must  declare  upon  the  contract  as  in  as- 
sumpsit, and  must  aver  and  prove  a  valuable  consideration.'* 
But  the  English  statute  of  (^ueen  Anne  provided  that  an 
action  might  bo  maintained  on  a  promissory  note  ^\^thout 
alleging  a  consideration;  and  such  is  the  effect  of  all  statutes 
which  make  promissory  notes  negotiable.^  It  follows,  there- 
fore, that  all  such  notes  as  are  not  negotiable  by  statute, 
or  upon  which  no  action  of  debt  is  authorized  by  statute, 
remain  as  at  common  law;  and  not  importing  consideration, 
it  must  be  alleged  and  proved." 

SECTION  11. 

GOOD    AND    VALUABLE    CGISrSIDERATIONS. 

§  93.  Accommodation  bills  and  notes. —  The  mercantile 
credit  of  parties  is  frequently  loaned  to  others  by  the  sig- 
nature of  their  names  as  drawer,  acceptor,  maker,  or  in- 
dorser  of  a  bill  or  note,  used  to  raise  money  upon,  or  other- 
Avise  for  their  benefit.  Such  instruments  are  tenned  accom- 
modation ])aper.  An  accommodation  bill  or  note,  then,  is 
one  to  which  tbe  accommodating  party  has  put  his  name, 
without  consideration,  for  the  purpose  of  accommodating 
some  other  party  who  is  to  use  it,  and  is  expected  to  pay 
it.'     Between  the  accommodating  and  accommodated  par- 


3  Averett's  Admr.  v.  IJookcr,  If)  Unitt.  109;  Frank  v.  Irgens,  27 
Minn.   43. 

4  Daniel  on  Negotiable  Instruments,  §   102. 
f>  Glasscock  v.  Glasscock,  00  Mo.  027. 

G  Peasloy  v.  IJoatwriglit.  2  T.ciirli.  inS;  Avcretfs  Adinr.  v.  Booker,  1.3 
Gratt.   105. 

7Fant  V.  Miller.  17  Cratt.  47:  .TefVcrson  County  v.  Railroad  Co..  GG 
Iowa,   389. 


58  CONSIDERATION    OF    NEGOTIABLE    INSTRUMENTS.        §  1>4. 

ties,  the  consideration  may  be  shovm  to  be  wanting,^  but 
when  tlie  instnimeut  has  passed  into  the  hands  of  a  third 
party  for  value,  and  in  the  usual  course  of  business,  it  can- 
not be;  for  as  between  remote  parties,  as  we  have  already 
seen,  the  consideration  which  the  plaintiff  gave  for  his  title, 
as  well  as  that  for  which  the  defendant  contracted  the  lia- 
bility, must  be  impeached  in  order  to  defeat  a  recovery.^ 
^\jid  the  circumstance  that  the  accommodation  maker  was 
assured  that  the  payee  would  protect  it  being  known   to  the 
holder,  does  not  weaken  in  any  degree  his  title  to  recover. 
§  94.    An    accommodation    indorser,    who    has    paid    the 
amount  of  the  note  to  a  subsequent  indorsee,  may  recover 
of  the  maker  mthout  being  subject  to  an  offset  of  the  maker 
against  the  payee,  although  he  knew  wdien  he  indorsed  it 
that  the  maker  was  a  creditor  of  the  payee  for  an  amount 
greater  than  the  amount  of  the  note.^^    And  the  payee  may 
recover  against  the  acceptor,  although  he  knew  w^hen  he 
took  the  bill  that  the  acceptance  was  for  accommodation  of 
another  party."     And  it  has  been  held  that  the  accommo- 
dation payee  and  indorser  may  recover  the  full  amount  of 
the  note,  although  he  took  it  up  by  paying  only  a  part.^^ 
But  tliis  is,  we  think,  erroneous. 

If  one  member  of  a  firm  obtains  an  accommodation  note 
payable  to  himself,  and  afterward  indorses  it  to  a  third  per- 
son, who  reindorses  it  to  the  same  firm,  before  maturity, 
and  for  good  consideration,  such  firm  cannot  recover  against 
the  maker,  both  parties  being  affected  vnth  the  notice  of  a 
want  of  consideration.^^ 

§  95.  An  accommodation  bill  or  note  is  not  considered  a 
real  security,  but  a  mere  blank,  until  it  has  been  negotiated, 

SEvansville  Nat.  Bank  v.  Kaufman,  93  N.  Y.  273;  Bank  of  British 
Xorth  America  v.  Ellis,  6  Sawy.  98. 

9Violett  V.  Patton,  5  Cranch,  142;  Stephens  v.  Monongahela  Nat. 
Bank,  88  Pa.   St.   157. 

10  Barker  v.  Barker,  10  Gray,  339. 

11  Spurgcon  v.  McPheeters,  42  Ind.  527. 

12  Daniel  on  Negotiable  Instruments,  §§  190,  1353. 
iSQuinn  v.  TuUer,  7  Cush.  244. 


§§  9G-98.       GOOD     AND     VAI.UAUr.E     CONSIDERATIONS.  59 

iind  it  tben  becomes  binding  upon  all  of  tbe  accommodation 
indorsers  in  like  maimer  and  to  tbe  like  eti'ect  as  if  tbej' 
were  successive  indorsers/"*  but  until  it  bas  been  negotiated 
any  party  may  Avitbdraw  bis  indorsement,  accej)tance,  or 
otber  liability  upon  it,  and  rescind  bis  engagement ;^'^  and 
tbat  rigbt  is  not  impaired  by  tbe  circumstance  tbat  be  may 
be  indemnified  by  an  assignment,  or  otber  security. ^*^ 

§  96.  A  person  who  indorses  a  note  as  an  accommodation 
indorscr  for  tbe  payee,  sucb  note  baving  been  made  by  an 
accommodation  maker,  is  subject  to  all  tbe  obligations  and 
acquires  all  tbe  rigbts  of  a  party  to  negotiable  paper.'' 

If  obliged  to  take  up  sucb  note,  the  accommodation  maker 
cannot  sot  up  fraud  on  tbe  part  of  tbe  payee,  in  tbe  incep- 
tion of  tbe  note,  as  a  defense  to  bis  suit.'® 

§  97.  Valuable  considerations. —  Xot  only  ^vill  money  paid, 
or  advances  made,  or  credit  given,  or  work  and  labor  done, 
constitute  a  sufficient  consideration  for  a  bill  or  note,  but 
receiving  a  bill  or  note  as  security  for  a  debt  or  forbearance 
to  sue  upon  a  present  claim  or  debt,  or  the  dismissal  of  a 
pending  suit,  or  tbe  surrender  of  a  prior  valid  note,  or  the 
compromise  of  a  supposed  cause  of  action,  or  becoming  a 
surety  or  giving  an  extension  of  time  to  an  imputed  debtor, 
or  doing  any  other  act  at  tbe  request  of  tbe  drawer,  in- 
dorser,  or  acceptor,  will  be  equally  sufficient  to  enforce  his 
engagement.'^  A  note  on  condition  that  tbe  payee  abstain 
for  a  certain  time  from  intoxicating  drink  would  be  valid.^ 
So,  also,  a  note  in  consideration  of  a  release  of  an  inchoate 
right  of  dower.^ 

§  98.  Bankers  receiving  tbe  bills  or  notes  of  their  cus- 
tomers for  collection  are  considered  holders  for  sufficient 

14  Whitworth  v.  Adams,  5  Rand.  342 ;  'May  v.  Boisseau,  8  Leigh,  164. 

15  Second  Nat.  Bank  v.  Howe,  40  Minn.  390. 

16  May  V.  Boisseau,  8  Leigh,  164. 

17  Daniel  on  Negotiable  Instruments,  §  192. 

18  Laubach  v.  Purscll,  35  N.  J.  L.  434. 

ii>  Daniel  on  Negotiable  Instruments,  §  183. 

20Lindell  v.  Rokes,  60  Mo.  249. 

21  Nichols  V.  Nichols,  136  Mass.  256. 


60  COXSIDERATIOX    OF    NEGOTIABLE    INSTRUMENTS.        §  99. 

consideration,  not  only  to  the  extent  of  advances  already 
made  by  them  either  specifically  or  upon  account,  but  also 
for  future  responsibilities  incurred  upon  the  faith  of  them.^^ 
The  balances  upon  an  account  are  a  shifting  consideration 
for  bills  and  notes  deposited  as  security  with  the  banker.^^ 
Thus,  where  one  bank,  which  we  may  call  A.,  sent  an  ac- 
commodation bill  accepted  by  C,  to  another  bank,  which 
we  may  call  B.,  to  secure  an  indebtedness  upon  account; 
and  when  the  bill  became  due,  the  latter  bank  had  become 
indebted  to  the  former,  but  the  bill  was  not  withdrawn,  and 
subsequently  the  indebtedness  shifted  back,  and  the  original 
debtor,  bank  A.,  became  bankrupt,  owing  to  the  correspon- 
dent, B.,  a  sum  upon  account,  it  was  held  that  the  latter 
could  recover  against  C.  upon  the  accommodation  bill  ac- 
cepted by  him.^^      Where   a  bank  discounts  a  bill  before 
maturity,   paying  part  of  the  proceeds  in  money  and  ap- 
plies the  residue  in  payment  of  a  past  due  note,  of  the  payee 
which  is  surrendered,  it  is  a  holder  for  valuable  considera- 
tion.^^    A^Tiere  a  note  was  delivered  by  the  maker  to  the 
payee   to   be   discounted  for  the  maker's  benefit,   and  the 
payee  left  it  at  the  bank  wath  the  understanding  that  he, 
the  payee,  might  draw^  against  it,  it  was  held  in  a  suit  against 
the  maker,  of  wdiose  interest  in  the  note  the  bank  had  no 
notice,  that  the  maker  was  liable  for  the  sums  drawn  against 
the  note  by  the  payee,  the  payment  of  which  sums  was  in 
effect  a  discount  of  the  note  to  the  amount  so  paid;  also 
that  the  result  w^ould  be  the  same  if  it  should  be  considered 
that  the  note  was  simply  pledged  for  the  sums  paid  upon 
the  draft.2« 

§  99.  Services. —  Professional  services,  whether  of  a  physi- 
cian, attorney,   or  other  person,  in  the  learned  or  skilled 

22Byle3  on  Bills  (Sharswood's  ed.),  230;  Bosanquet  v.  Dudman,  1 
Stark.  1 ;  Percival  v.  Frampton,  2  Cromp.,  M.  &  R.  180. 

23  Bank  of  Metropolis  v.  New  England  Bank,  1  How.  239,  17  Pet. 
174;   Swift  V.  Tyson,  16  Pet.  21. 

24Atwood  V.  Crowdie,  1  Stark.  483  (2  Eng.  C.  L.). 

25  Mechanics',  etc..  Bank  v.  Crow,  60  N.  Y.  85. 

20  Piatt  V.  Beebe,  57  X.  Y.  339. 


§   100.  GOOD    AXD     VALUABLE    CONSIDEBATIONS.  01 

professions,  constitute,  in  general,  a  sufficient  consideration 
for  a  bill  or  note;  and  the  consideration  that  the  plaintitf, 
iin  attorney,  should  prevent  the  approval  of  the  command- 
ing general  to  the  sentence  of  a  military  court  condemning 
a  guerrilla  to  death,  is  valid."^  Services  of  any  business 
character  are  sufficient,  and  the  inadequacy  of  the  services 
or  extravagance  of  the  compensation  is  not  material.^ 
Services  rendered  in  procuring  a  pardon  for  an  offense  have 
also  been  respected  f'"^  though  it  has  been  said  by  some  of  the 
authorities  that  this  would  contravene  public  policy  unless 
done  by  leave  of  the  court.^"  This  is,  we  think,  too  severe. 
Services  exerted  in  procuring  the  passage  of  an  act  through 
a  legislative  body  are  not  recognized  as  the  legitimate  ex- 
ercise of  the  legal  profession;  and  compensation  for  them 
cannot  be  recovered.^^  If  contingent  upon  the  passage  of  a 
bill,  it  would  be  obWous  that  they  were  illegitimate.^^ 

§  100.  As  to  pre-existing  debts. —  There  is  no  doubt  that  a 
pre-existing  debt  uf  the  drawer,  maker,  or  acceptor  is  a  valid 
consideration  for  his  drawing  or  accepting  a  bill  or  executing 
a  note,  and  indeed  is  as  frequently  the  consideration  of 
negotiable  paper  as  a  debt  contracted  at  the  time,^^  and  it 
is  equally  as  valid  and  sufficient  consideration  for  the  in- 
dorsement and  transfer  to  the  creditor  of  the  bill  or  note 
of  a  third  party  which  is  in  his  hands.  And  the  best  con- 
sidered, as  well  as  the  most  numerous,  authorities  regard 
the  creditor  who  receives  the  bill  or  note  of  a  third  party 
from  his  debtor  either  in  payment  of,^'*  or  as  collateral  se- 

27  Thompson  v.  Wharton,  7  Bush,  4G3 ;  Mowat  v.  Brown,  19  Fed.  87. 
28Co\vee  V.  Cornell,  75  N.  Y.  91. 
20  Meadow  v.  Bird,  22  Ga.  246. 

aoChitty  on  Bills  (13th  Am.  cd.),  100;  Thompson  on  Bills  (Wilson 
«d.),  70. 

31  Marshall  v.  B.  &  O.  K.  Co.,  Iti  How.  334;  Clippinger  v.  Hepbaugh, 
5  Watts  &  S.  315. 

32  Mills  V.  Mills,  40  N.  Y.  543. 

33  Swift  V.  Tyson,  16  Pet.  1;  Townsley  v.  Snmrall.  2  Pc-t.  170;  Me- 
Intyre  v.  Yates,    104   111.   500. 

34  Swift  V.  Tyson,  16  Pet.  1  :  Bank  of  Sandusky  v.  Scoville,  24  Wend. 
115;   Sohepp  V.  Carpenter.  51   N.  Y.  ti02. 


62        CONSIUEKATIO:\-    OF    NEGOTIABLE    INSTRUMENTS.        g  101. 

ciirity  for,  his  debt,  as  entitled  to  the  full  protection  of  a 
bona  fide  holder  for  value,  free  from  all  equities  which  might 
have  been  pleaded  between  the  original  parties.^^  But  there 
is  much  controversy  on  this  subject,  and  it  is  hereinafter 
more  fully  treated.^'^ 

SECTION  III. 

WHAT   AEE   ILLEGAL    CONSIDERATIONS. 

§  101.  As  to  illegal  considerations  generally. —  A  nego- 
tiable contract  which  is  founded  upon  an  illegal  considera- 
tion, in  whole  or  in  part,  is  void;^'^  for  the  law  will  not  aid 
one  who  seeks,  or  has  consented  to,  its  violation.  Some- 
times the  consideration  is  illegal,  because  opposed  to  the  gen- 
eral principles  of  the  common  law;  and  sometimes  because 
it  is  specially  interdicted  by  statute.  The  considerations 
which  are  illegal  at  common  law  are:  1.  Such  as  violate 
the  rules  of  religion,  morals,  or  public  decency;  and,  2.  Such 
as  contravene  public  policy.^^ 

§  102.  Illegal  considerations  by  the  common  law;  wagers^ 
futures,  etc. —  As  a  general  rule,  wagers  were  not  illegal  by 
the  common  law.^^  But  wagers  upon  the  sex  of  a  person;'*'' 
that  an  unmarried  female  would  bear  a  child  ;*^  upon  the 
result  of  a  prize  fight  ;^^  or  the  result  of  a  criminal  trial  ;^^ 
or  the  result  of  an  election;^*  or  upon  the  question  of  war 
or  peace,'*^  would  be  illegal  as  opposing  public  policy  and 

35  Daniel  on  Negotiable  Instruments,  §  832;  Devendorf  v.  W.  Va.  O. 
&  O.  L.  Co.,  17  W.  Va.  176. 

36  Daniel  on  Negotiable  Instruments,  §§  820,  826,  827,  831. 
37Friek  v.  Moore,  82  Ga.   163;    Daniel  on   Negotiable  Instruments, 

§   204. 

38  Daniel  on  Negotiable  Instruments,   §   195. 

39  Good  V.  Elliott,  3  T.  R.  693. 

40  Da  Costa  v.  Jones,  Cowp.  729. 

41  Ditchburn  v.  Goldsmith,  4  Campb.  152. 

42  Hunt  V.  Bell,   1   Bing.   1,   7   Moore,  212. 

43  Allen  V.  HeaiTi,  1  T.  R.  57;  Rust  v.  Gott,  9  Cow.  169. 
44Lockhart  v.   Hullinger,   2   III.  App.  405;    Attwood  v.  Weeden,   12 

R.   I.  293. 

45  Thompson  v.  Harrison,  S.  C,  Tex.,  Dallam's  Dee.,  466. 


g   103.  ILLEGAL.    CONSIDEKATIONS.  [j'.j 

sound  morals.  And,  as  a  general  rule,  iu  the  United  tStates 
all  niauuer  of  wagers  are  declared  illegal  by  statutory  enact- 
ments; and  even  where  not  prohibited  by  statute,  they  are 
regarded  as  opposed  to  public  policy  and  sound  morality.^* 
Tutting  up  margins  in  stock  speculations  is  regarded  as  a 
species  of  gambling,  and  notes  given  for  such,  margins  are 
void  as  upon  illegal  consideration."*^  Tn  ^lassachusetts  one 
who  pays  a  gambhng  debt  for  another  cannot  recover  the 
amount.'*'*  And  also,  as  a  general  iide,  in  the  United  States, 
contracts  for  the  sale  or  purchase  of  commodities,  such  as 
cotton  or  grain,  when  no  actual  delivei-y  of  the  same  is 
contemplated  or  intended,  such  transactions  being  com- 
monly known  as  "  futures,"  are  held  contrary  to  pul)lic 
])oli('y  and  void.  A  bona  fide  contract  for  the  future  de- 
livery of  any  article  is  valid,  but  if  the  contract  amount 
to  a  mere  staking  of  margins  to  cover  the  diiference  between 
the  price  of  the  article  at  the  time  of  purchase  and  the 
time  of  delivery,  it  is  void.^^ 

§  103.  As  to  considerations  which  oppose  public  policy. — 
Considerations  which  oppose  public  policy  are  never  re- 
spected by  the  law,  and  contracts  founded  upon  them  are 
universally  condemned.  Contracts  in  general  restraint  of 
trade  ;^^  or  restraining  or  preventing  marriage  even  for  a 
time;^^  or  to  assist  another  in  furthering  a  marriage  where 
the  promisor  has  no  right  to  interfere;""  champertous  con- 
tracts between  attorney  and  client,''^  to  procure  or  sell  a 
public  office^^  or  votes;  or  to  induce  a  candidate  to  with- 
<lraw;^^  to  suppress  evidence  or  interfere  "with  the  course 

48  Boughner  v.  ilayer,  .'5  Colo.  75. 

47  Fareira  v.  Gabell,  89  Pa.   St.  89. 

48Scolluns  V.  Flyn,  120  Mass.  271. 

49Bigelow  V.  Benedict,  70  N.  Y.  202;  Gregory  v.  Wendell,  30  Mich. 
337;  Irwin  v.  Wiiliar,  110  U.  S.  499. 

T'OChitty  on   Bills   r*83],  99. 

r«i  Hartley  v.  Rice,  10  East,  22:  Lowe  v.  Peers.  4  Burr.  2225. 

•'>2  Roberts  v.  Roberts,  3  P.  Wms.  GG ;  1  Parsons  on  Contracts,  555, 
556. 

M  Million  V.  Ohmsberg.   10  Mo.  App.  432. 

M  Richardson  v.  Mellish.  2   Bing.  229;   Martin  v.  Wade,  37  Cal.   168. 

•'■s^Han^  v.  Smith.  87  Pa.  St.  63. 


64        COXSIDKKATIOX    OF    XEGOTIABLK    INSTKUMEXTS.        §  104. 

of  justice  by  dropping  a  criniiual  prosecution;^"  and  con- 
tracts to  indeiniiify  a  person  in  doing  an  act  of  known  ille- 
gality as  inducement  thereto;"'  or  to  do  anything  reprehen- 
sible for  its  injurious  effects  upon  the  feehngs  of  third  per- 
sons; or  in  fraud  of  the  rights  and  interests  of  third  per- 
sons,^^  are  instances  of  the  kind  of  contracts  which  the  law 
will  not  recogTiize. 

Abandonment  of  the  prosecution  of  an  offense  against  the 
public  of  which  the  law  requires  prosecution  is  not  a  good 
consideration.^"  It  is  not  necessary  to  stamp  the  transaction 
with  illegality  that  a  felony  should  have  been  committed;'^ 
but  a  note  given  to  a  prosecutor  after  trial  and  conviction 
for  the  expenses  of  the  prosecution  would  be  valid  ;^^  other 
instances  of  a  similar  character  might  be  multiplied.  The 
true  question  in  such  cases  seems  to  be,  was  the  note  given 
for  the  money,  or  to  settle  the  prosecution.  In  the  first 
event,  it  would  be  valid;  in  the  latter,  illegal  and  void.^^ 

§  104.  As  to  considerations  illegal  by  statute. —  The  bona 
fide  holder  for  value  who  has  received  the  paper  in  the 
usual  course  of  business  is  unaffected  by  the  fact  that  it 
originated  in  an  illegal  consideration,  without  any  distinc- 
tion between  cases  of  illegality  founded  in  crime,  involving 
moral  turpitude,  which  are  termed  mala  in  se,  and  those 
founded  in  positive  statutory  prohibition  which  are  termed 
mala  prohihita.  The  law  extends  this  peculiar  protection 
to  negotiable  instruments,  because  it  would  seriously  em- 
barrass mercantile  transactions  to  expose  the  trades  to  the 
consequences  of  having  the  bill  or  note  passed  to  him  im- 
peached for  some  covert  defect. ^^     There  is,  however,  one 

5*5  Commonwealth  v.  Johnson,  3  Cush.  454;  Soule  v.  Bonney,  37  Me. 
128. 

STChitty  on  Bills   ['Sfj],  102;   Goodale  v.  Holdridge,  2  Johns.  193. 

58  Sullivan  v.  Bonesteel,  79  N.  Y.  631;  Ward  v.  Doane,  43  N.  W.  980. 

59na\Ties  V.  Rudd,  102  N.  Y.  372;  National  Bank  v.  Kirk,  90  Pa. 
St.  49. 

eo  Rogers  v.  Blythe,  .'SI  Ark.  ,523;   Chandler  v.  Johnson,  39  Ga.  85. 

Gi  Kirk  V.  Strickwood,  4  B.  &  Ad.  421. 

G2  Godwin   v.   Crowell,   56   Ga.   566. 

63  New  V.  Walker,  108  Ind.  365;  Thompson  v.  Samuels,  14  S.  W.  143. 


§  105.  liY     WHAT     LAW     I.KCi  A  I.IT  V     DKTKKMIXKD.  C5 

exception  to  this  rule;  that  when  a  statute,  expressly  or  by 
necessary  implicatiou,  declares  the  instruiueut  absolutely 
void,  it  gathers  no  vitality  by  its  circulation  in  respect  to 
the  parties  executing  it;"^  though  even  upon  such  instru- 
ments an  indorser  may  be  held  liable  to  a  bona  fide  holder 
without  notice.''^ 

There  are  a  very  few  cases  in  which  the  statute  renders 
such  instraments  absolutely  void;  and  the  most  important, 
if  not  the  only  instances  now  to  be  met  with,  are  the  statutes 
against  usury  and  gaming."^ 

SECTION  IV. 

BY  WniAT  LAW  LEGALITY  OF  COXSIDERATIOX  IS  DETERMIXED. 

g  105.  Determined  by  the  law  of  country  where  made. — 
The  legality  of  the  consideration  of  a  contract  is  to  be  de- 
termined by  the  laws  of  the  State  or  country  where  the 
contract  is  made  and  not  by  those  of  the  State  or  country 
where  the  suit  is  brought.  The  rules  of  every  nation,  from 
comity,  admit  that  the  laws  of  every  other  nation  in  force 
within  its  ovm  limits  Ought  to  have  the  same  force  every- 
where, so  far  as  they  do  not  prejudice  the  rights  of  other 
governments  or  their  citizens.^^  The  rule  is  founded  not 
merely  on  the  convenience,  but  on  the  necessit}'  of  nations; 
for  otherwise  it  w^ould  be  impracticable  for  them  to  carry 
on  an  extensive  intercourse  or  commerce  with  each  other, 
or  even  for  social  order  to  exist. ^^ 

§  106.  Governed  by  law  in  existence  at  the  time  contract 
was  made. —  The  laws  in  force  at  the  time  a  contract  was  en- 
tered into    detennine  its  legality  and  eifect;  and  where  a 

«-i  Vallett  V.  Parker,  6  Wend.  G1.5:  Hatch  v.  Binroughs.  1  Woods,  439; 
Woods  V.   Armstrong,  54  Ala.   150. 

05  Daniel  on  Negotiable  Instruments,  §  073  ct  seq. 

66  Savings  Bank  of  Kansas  v.  National  Bank  of  Commerce,  38  Fed. 
800;  Union  Nat.  Bank  v.  Fraser,  03  Miss.  231. 

67Thorington  v.  Smith,  8  Wall.  11;  Cook  v.  Lillo.  103  U.  S.  793; 
DaTiiel  on  Negotiable  Instruments,  §  805  et  scq. 

<58  Boyte  V.  Tabb,  18  Wall.  548;  Daniel  on  Negotiable  Instruments, 
§   860. 

5 


66        COISrSIDER.VTIOX    OF    NEGOTIABLE    INSTRUMENTS.        §  107. 

law  prohibiting  the  sale  of  spirituous  liquors  has  been  re- 
pealed, it  does  not  thereby  validate  a  note  given  in  violation 
of  the  statute  when  it  was  in  force.*^**  And  accordingly  it 
has  been  held  by  the  Supreme  Court  of  the  United  States 
that  a  note  dated  March  26,  1861,  and  given  for  a  slave, 
Could  be  recovered  on,  not^\itllstanding•  that  slavery  was 
abolished  on  the  1st  day  of  January,  1862,  and  the  contract 
of  sale  contained  the  warranty,  "  the  said  negro  to  be  a  slave 
for  life,"  '^  and  also  notwithstanding  the  thirteenth  amend- 
ment to  the  constitution,  made  in  1865,  by  which  it  is 
ordained  that  "  neither  slavery  nor  involuntary  servitude 
shall  exist  in  the  United  States  nor  in  any  place  subject  to 
their  jurisdiction." 

In  the  State  tribunals  of  the  Southern  States,  Avhere  this 
question  has  been  of  much  consequence,  conflicting  views 
have  been  taken,  but  many  of  the  cases  concur  in  judgment 
with  the  Supreme  Court  of  the  United  States,'^^  and  in  other 
States  of  the  Union,  both  before  and  since  the  war,  the 
principles  of  these  decisions  have  been  asserted."^^ 

SECTIO^T  V. 

PARTIAL    WANT,    FAILURE,    OR    ILLEGALITY    OF     CONSIDERATION. 

§  107.  Partial  want  of  consideration. —  Whenever  the  de- 
fendant is  entitled  to  go  into  the  question  of  consideration, 
he  may  set  up  the  partial  as  well  as  the  total  want  of 
consideration.'" 

So,  Avhere  a  father  gives  his  son  a  note  partly  for  services 
and  partly  as  a  gratuity,  the  partial  want  of  consideration 

f>9  Daniel  on  Negotiable  Instruments,  §  168;  Holden  v.  Cosgrove,  12 
Gray,  216. 

TOOsborn  v.  Nicholson,  13  Wall.  655;  Boyce  v.  Tabb,  18  Wall.  548. 

Tl  McElvain  v.  ]\Iudd,  44  Ala.  48 ;  Thompson  v.  Warren,  5  Coldw.  644 ; 
Dowdy  V.  McClellan,  52  Ga.  408;  Calhoun  v.  Calhoun,  2  S.  C.  283. 
Contra,  Laprice  v.  Bowman,  20  La.  Ann.  234;  Lytle  v.  Wheeler,  21  La. 
Ann.   192. 

72Roundtree  v.  Baker,  53  111.  241. 

73  McGregor  v.  Bishop,  14  Ont.  10;  Daniel  on  Negotiable  Instruments', 
§  201. 


§   lOS.  I'AUTIAJ.    WANT,     KTC,    OF    CONSIDERATION.  G7 

iiiiglit,  l)c  iilcatlcil  us  to  such  jxirliidi  <»£  the  uuKHint  as  was 
gratuitous;  iiud  it  would  be  i\<>  ohjeetiou  that  no  distinct 
amount  was  tixed  upon  as  compensation  for  the  services, 
but  it  wouhl  bo  for  the  jury  to  setth;  what  amount  was 
founded  (in  the  one  considerat iun,  and  what  on  the  other."'* 
If  a  note  be  given  l)y  mistake  on  settlement  of  accounts 
for  an  amount  greater  than  that  actually  due,  there  is  want 
of  consideration  as  to  the  excess,  and  between  the  parties 
it  may  be  })leaded."'' 

§  108.  Total  and  partial  failure  of  consideration. —  The 
total  failure  of  consideration  is  as  good  a  defense  to  a  suit 
upon  a  bill  or  note  as  the  original  want  of  it,  and  is  con- 
fined to  the  like  parties.  Tf  the  contract  is  rescinded,  the 
consideration  of  the  bill  or  note  totally  fails,  and  payment 
of  it  cannot  be  enforced."'' 

And  a  partial  failure  of  the  consideration  is  a  good  de- 
fense pro  tanto.'^  But  such  i)art  as  is  alleged  to  have  failed 
must  be  distinct  and  definite,  for  only  a  total  failure,  or  the 
failure  of  a  specific  and  ascertained  part,  can  be  availed  of 
by  way  of  defense;  and  if  it  be  an  unliquidated  claim  the 
defendant  must  resort  to  his  cross-action.^*  Thus,  where 
bills  have  been  accepted  in  consideration  of  the  payee  giving 
the  acceptor  the  lease  of  a  house,  and  he  let  him  into  posses- 
sion, but  gave  no  lease,  it  was  held  no  defense  to  an  action 
on  the  bill,  but  that  there  was  merely  a  counter-claim  for 
damages.™  So  where  the  bill  was  given  for  work  to  be  done, 
and  the  w^ork  when  done  was  bungled  in  ]iart,  and  not 
Avorth  the  amount  of  the  bill.^  It  may  be  observed,  how- 
ever, that  in  most  of  the  States  the  common-law  rule  re- 
stricting the  defense  of  set-off  to  liquidated  claims,  is  so  far 
modified   as  to  admit  equitable  defenses   in   the  nature   of 


74  Parish  V.  Stone,  14  Pick.  108. 

75Seeley  v.  Engell,  1.3  N.  Y.  .'542:   Claxon  v.  Demaroo.   14  Bu-^h.  173. 
70  Hacker  v.  Brown,  81  Mo.  68;   :Maltz  v.  Fletcher.  .>2  Mich.  484. 
7TAGrnew  V.  Alden,  84  Ala.  .")02 ;   Torinus  v.  Buckhani.  29  :Minn.   12S. 
7SEImiTiger  v.   Drew.  4   :McLean,   .388;    Stone  v.   Peake,   IG   Vt.   213; 
Tulsifer  v.  Hotchkiss,  12  Conn.  234. 
"S*  Mopjrridge  v.  Jonea,  14  East.  485. 
SOTrickey  v.  Larne,  6  M.  &  W.  278. 


GS        CONSIDEKATIOX    OF    NEGOTIABLE    INSTRUMENTS.        §  109. 

set-oft',  as  fraud  or  mistake  in  the  procureiueiit  of  a  contract, 
or  any  other  matter  entitling  the  party  to  relief  in  eciuity 
affainst  the  obho-ation  of  the  contract.^^ 

§  109.  Partial  illegality  of  consideration. —  AVheii  the  de- 
fense is  founded  on  illegality  of  consideration,  it  is  to  be 
distinguished  from  a  defense  on  the  ground  of  a  want  or 
failure  of  consideration  by  this  peculiarity  —  that  a  partial 
illegality  vitiates  the  bill  or  note  in  totu,  while  the  partial 
want  or  failure  of  consideration  only  vitiates  it  pro  iantoP 

And  a  mortgage  to  secure  a  bill  or  note  of  which  the 
consideration  is  in  part  illegal  is  also  wdiolly  void.^^  The 
reason  of  the  distinction  is  based  mainly  upon  the  ground 
of  public  policy,  the  courts  not  undertaking  to  unravel  a 
web  of  fraud  for  the  benefit  of  the  party  who  has  woven 
it.^^  If,  however,  the  legal  portion  of  the  consideration 
were  distinctly  severable,  the  party  could  still  recover  by  the 
proper  action  to  its  proportionate  extent,'^^  though  not  upon 
the  bill  or  note.^^  There  is  authority,  however,  to  the 
eftect  tluit  there  may  be  a  recovery  on  the  bill  or  note  to 
the  extent  of  the  distinctly  severable  and  valid  considera- 
tion.^^ Where  the  legal  part  of  the  consideration  exceeds 
the  amount  of  the  note,  though  another  part  of  the  con- 
sideration be  illegal,  the  note  will  be  valid.**  And  it  has 
been  held  that  where  a  bill  is  given  in  renewal  of  other  bills, 
one  of  which  was  upon  an  illegal  consideration,  it  would  be 
valid  as  to  the  amount  which  the  legal  bills  evidenced  and 
void  as  to  the  rest  for  want  of  consideration.^^ 

81  Applegarth  v.  Robinson,  65  Md.  493. 

82Hanauer  v.  Doane,  12  Wall.  342;  Hyslop  v.  Clark,  14  Johns.  405; 
McNamara  v.  Gargett,  68  Mich.  454. 

83Brigham  v.  Potter,  14  Gray,  522;   Denny  v.  Dana,  2  Gush.  160. 

84Byles  on  Bills  [*140],  250. 

85  Carlton  v.  Woods,  8  Fost.  290;   Widoe  v.  Webb,  20  Ohio  St.  431. 

80  Robinson  v.  Bland,  2  Burr.  1077;  Hanauer  v.  Doane,  12  Wall.  342. 

87Clopton  V.  Elkin,  46  Miss.  95. 

8S  Warren  v.  Chapman,   105  Mass.  87. 

89  Doty  V.  Knox  County  Bank,   10  Ohio   (N.  S.),  133. 


^§110,111.        WHEN    CONSIDEKATION  OI'KN    TO    INQUIRY.        GO 


SECTION  VI. 

BETWEEN   WJIAT   I'AUTIES    THE    CONSIDERATION    IS   OPEN    TO 

INQUIRY. 

§  110.  Who  are  parties  privy  in  negotiable  instruments. — 
The  same  rule  which  admits  iiuiuiry  into  the  consideration 
of  negotiable  paper  between  the  original  payor  and  payee 
extends  to  admit  such  inquiry  in  any  suit  between  parties 
between  whom  there  is  a  privity.  That  is  to  say,  between 
the  immediate  parties  to  any  contract  evidenced  by  the 
drawing,  accepting,  making,  or  indorsing  a  bill  or  note,  it 
may  be  shown  that  there  was  no  consideration  (as,  that  it 
was  for  accommodation);^**  or  that  the  consideration  has 
failed,  or  a  set-off  may  be  pleaded;  but  as  between  other  par- 
ties remote  to  each  other,  none  of  these  defenses  are  ad- 
missible. It  becomes  important  then  to  determine  who  are 
to  be  regarded  as  the  immediate  parties,  or  parties  between 
whom  there  is  a  privity,  to  a  negotiable  instiTiment,  and 
who  are  remote.  Among  the  former  may  be  classed:  (1) 
The  drawer  and  acceptor  of  a  bill;^^  or  (2)  The  drawer  and 
payee"^  of  a  bill  as  a  general  rule;  (3)  The  maker  and  payee 
of  a  note;^^  and  (4)  The  indorser  and  immediate  indorsee 
of  a  bill  or  note.^'* 

§  111.  Who  are  remote  parties  to  negotiable  instruments 

But  the  want  of  consideration,  or  the  failure  thereof,  can- 
not be  pleaded  in  a  suit  brought:  (1)  By  an  indorsee 
against  the  maker  of  a  note;^^  (2)  By  an  indorsee  against  a 

tH)  Murphy  v.  Keyes,  39  X.  Y.  Sup.  Ct.  18;  Wilson  v.  Ellsworth,  25 
Kebr.  240. 

01  Thomas  v.  Tliomas,  7  Wis.  476;  8pur<xonn  v.  McPhoctera,  42  Ind. 
627. 

92]\lK'ulUH'h  V.  Hoirman,  10  llun,  i;i:j;  Spur-eou  v.  Mcrhcetcrs,  42 
Ind.  527. 

as  Kennedy  v.  Goodman,  14  Xebr.  585;  Flaum  v.  Wallace,  0  S.  E. 
571. 

9-t  Burnett  v.  OfTerman.  7  Watts,  i;50;  Klein  v.  Keyes,  17  Mo.  32G; 
Piatt  V.  Snipes.  43  Ark.  23. 

»5  Price  V.  Keen,  40  X.  .F.  L.  332;   Burncs  v.  Scott,  117  U.  S.  582. 


70        CONSIDERATION     OF    ^•EGOTlABLl•:    iXSTRUMEXTS.        §  112. 

prior,  but  not  liis  immediate  indorser  ;^^  (3)  By  tlie  indorsee 
against  the  acceptor  of  a  bill,"'^  nor  by  the  payee  against 
the  acceptor  of  a  bill,  as  a  general  iiile.^*  They  are  re- 
garded as  remote  parties  to  each  other,  and  between  such 
parties  two  distinct  considerations  must  be  inquired  into  in 
order  to  perfect  a  defense  against  the  holder:  (1)  The  con- 
sideration which  the  defendant  received  for  his  liability; 
and  (2)  That  which  the  plaintiff  gave  for  his  title.^'*  And 
if  any  intermediate  holder  gave  value  for  the  instrument, 
that  intervening  consideration  will  sustain  the  plaintiff's 
title. ^ 

§  112.  Want,  failure,  or  fraudulency  of  consideration. — 
If  the  original  consideration  were  tainted  with  fraud  or  ille- 
gality, or  has  failed  in  whole  or  in  part,  and  ihe  bill  or  note 
has  passed  into  the  hands  of  a  hona  fide  holder  for  value 
without  notice,  yet  if  it  be  returned  for  a  valuable  considera- 
tion to  the  payee  who  is  a  privy  to  the  original  considera- 
tion, he  could  stand  upon  no  better  footing  than  if  the 
instrument  had   remained  in   his   hands. ^ 

§  113.  Defenses  between  privy  parties. —  That  the  bill  or 
note  has  been  lost  or  stolen,"'  or  was  executed  under  duress,* 
or  under  fraudulent  misrepresentations,^  or  for  fraudulent 
consideration,*'  or  for  illegal  consideration,"  or  has  been 
fraudulently    obtained    from    an    intermediate    holder,^    or 

98  Etheridge  v.  Gallagher,  55  Miss.  4G4 ;  1  Parsons  on  Notes  and  Bills, 
170. 

OT  Flower  V.  Sadler,   10  Q.  B.  Div.  572. 

fSLaliin  &  Rand  Powder  Co.  v.  Sinsheimer,  48  Ud.  411;  Hoffman  & 
Co.  V.  Bank  of  Milwaukee,   12  Wall.   181. 

89  United  States  v.  Bank  of  Metropolis,  15  Pet.  393;  Swift  v.  Tyson, 
16  Pet.  1;  Goetz  v.  Bank  of  Kansas  City,  119  U.  S.  556. 

1  Boyd  V.  McCann,  10  Md.  118;  Watson  v.  Flannagan,  14  Tex.  354. 

2  Sawyer  v.  Wiswell,  9  Allen,  42;  Kost  v.  Bender,  25  Mich.  516; 
Cline  V.  Templeton,  78  Ky.  550. 

3  Mills  V.  Barber,  1  M.  &  W.  425. 

4  Clark  V.  Peace,  41  X.  11.  414:  Griffith  v.  Sitgreaves,  90  Pa.  St.  161. 
nVathir  v.  Zane,  6  Gratt.  246;  Hutchinson  v.  Bogg,  28  Pa.  St.  294. 

6  Rogers  v.  Morton,  12  Wend.  484. 

7  Shirley  v.  Howard,  53  111.  455;  Holden  v.  Co?grove,   12  Gray,  216. 
s  1  Parsons  on  Notes  and  Bills,  188. 


g  114.  now    1  i.i.i;(.Ai.rrv    may    kk   i-ruiiKi).  71 

boon  in  any  way  the  subject  of  fraud  or  felony,"  or  has 
been  misappropriated  and  diverted/"  or  that  it  was  given  as 
coUateral  security/^  or  for  a  loss  for  which  the  party  was  not 
liable,  or  that  othenvise  it  was  without  valuable  considera- 
tion," is  a  good  defense  as  between  the  parties  privy  to  it. 
And  in  some  cases  that  it  was  given  by  mistake  for  too  great 
a  sum,  or  when  no  sum  was  due,  the  evidence  showing 
fraud  or  a  total  or  partial  want  of  consideration.^^  The  same 
defense  which  the  defendant  might  make  to  an  action  l)y 
an  indorsee  of  the  note  given  by  him,  and  the  same  require- 
ment of  proof,  may  be  made  by  him  in  an  action  on  a  re- 
newal of  a  former  note,  both  notes  being  regarded  as  given 
upon  the  same  consideration.^'* 

SE(^T10.\   VII. 

now    TLLFX.AI.ITV    :iIAY    BE    I'UIiGED KEXEWAL    OF    IXSTKU- 

MEXT. 

§  114.  As  to  bills  and  notes  given  in  renewal. —  If  the  con- 
sideration of  the  original  bill  or  note  be  illegal,  a  renewal 
of  it  will  be  open  to  the  same  objection  and  defense;^"  and 
if  the  original  instrument  was  obtained  by  fraud,  a  renewal 
of  it  by  the  original  parties  mthout  knowledge  of  the  fraud, 
would  stand  upon  the  same  footing.^"  But  if  at  the  time 
the  renewal  was  executed  the  parties  signing  knew  of  the 
fraud  in  the  original,  they  will  be  regarded  as  purging  the 
contract  of  the  fraud,  and  cannot  then  plead  it.^'  So  if 
the  maker  of  a  note  held  by  an  indorsee  who  knew  that  the 

i'Holden  v.  Cosgrove,  12  Gray,  216;  Western  Bank  v.  Mills,  7  Gush. 
540. 

10  Merclianls"  Nat.   Hank  v.  ComstiK-k.  ;">.")  X.  Y.  24. 

11  Leighton  v.  Bowcn,  75  Me.  504. 

12  Dexter  Sav.  Bank  v.  Copeland,  77  Me.  2G9. 
isForman  v.  Wright,  11   Gom.  B.  481. 

!•*  Daniel  on  Negotiable  Instruments,  §§   170,  205. 
i5Sehutt  V.  Evans,  100  Pa.  St.  627;  Wegner  v.  liiering,  65  Te.x.  511; 
Sawyer  v.  Wiswell,  9  Allen,  30. 
l«  Sawyer  v.  Wiswell.  0  Allen.  30. 
nSawvcr  v.  Wiswell.  0  Allen.  ol>;  Calvin  v.  Sterrett,  41  Kan.  220. 


72        COXSIDEKATION     OF     AKGOTIABLK     IXSTKUMENTS.        §   115. 

consideration  between  the  maker  and  the  payee  had  failed 
when  he  took  it,  execntes  to  him  a  new  note,  it  has  been 
hekl  to  be  a  waiver  of  the  defense,  and  the  payee  of  the 
new  note  can  recover.^'' 

§  115.  Partial  illegality  of  instrument. —  If  a  note  or  bill 
be  given  for  a  cM.nsitlcraticm  wliich  is  in  part  illegal,  a  new 
note  for  the  same,  or  in  renewal  of  the  first,  is  equally  void.^** 
Ent  a  new  note  for  that  part  of  the  consideration  which  is 
legal  is  good  and  valid.  And  if  several  new  notes  are  given 
for  the  old  one,  some  of  the  new  ones  may  be  taken  to  be  for 
the  legal  part,  and  so  be  valid,  especially  if  they  are  only 
adequate  to  this  part  or  if  the  deduction  be  otherwise 
favored  by  circumstances.^^ 

18  Gill  V.  Morris,  11  Heisk.  614;  Keyes  v.  Mann,  63  Iowa,  560. 

10  Chapman  v.  Black,  2  B.  &  Aid.  588;  Seeligson  v.  Lewis,  65  Tex. 
115:   Preston  v.  Jackson,  2  Stark.  237. 

20  Daniel  on  Negotiable  Instruments,  §  206 ;  Crookshank  v.  Rose,  5 
Car.  &  P.  19. 


BOOK  II. 

PARTIES  TO  THE  INSTRUMENT. 


CHAPTEE  YI. 

PERSONS    QUALIFIED. 

§  116.  It  was  once  thought  that  none  but  merchants  could 
be  parties  to  negotiable  instruments,  but  this  notion  long- 
since  became  obsolete/  and  it  is  now  well  settled  that  any 
person  laboring  under  no  personal  or  political  disability  may 
be  a  party  to  any  negotiable  contract. 

We  shall  first  speak  of  those  who  may  be  parties,  and 
then  of  those  who  are  partially,  or  wholly  disqualified. 

SECTION  I. 

FIDUCIARIES  AS  PARTIES. 

§  117.  Personal  representatives. —  An  administrator  or 
executor  cannot  bind  tlie  decedent's  estate  by  any  nego- 
tiable instrument;  he  can  only  bind  himself.  If  he  make, 
accept,  or  indorse  a  negotiable  instrument  he  vnW  bind  him- 
self personally,  even  if  he  adds  to  his  own  name  the  desig- 
nation of  his  office  as  personal  representative.  Thus,  if  he 
signs  himself  "  A.  B.,  executor  (or  administrator)  of  C.  D."' 
or  "A.  B.,  as  executor  of  C.  D.,"  the  representative  terms 
will  be  rejected  as  surplusage.^  And  an  accommodation  in- 
dorse!', or  acceptor,  who  pays  the  amount  of  the  instrument, 
has  no  claim  against  the  decedent's  estate."^  But  if  the  bill 
or  note  of  the  personal  representative  be  taken  for  a  debt 

1  Chitty  on  Bills  [*1.5],  20;  Daniel  on  Negotiable  Instniments,  §  208. 

2  KiiifT  V.  Thom,  1  T.  R.  487:  Gregory  v.  Leigh,  33  Tex.  813:  Snead 
V.  Coleman,  7  Cratt.  300. 

SKirkman  v.  Benhani,  2S  Ala.  r>01. 

[73] 


74:  PERSONS     QT  AT.I  FI  III).  §§   118,   119. 

of  the  decedent,  the  estate  is  discharged  from  liability,  and 
the  representative  alone  is  bonnd.'* 

§  118.  Personal  representative  individually  bound. —  Assets 
in  the  hands  of  the  personal  representative  constitute  a 
suflicient  consiikn-ation  for  a  ])romise  to  pay  the  decedent's 
debt.  lie  is  presnnied  to  have  sufficient  assets,  and  hence 
it  is  presumed  that  the  obligation  is  based  upon  a  sufficient 
consideration.^ 

As  between  tlie  original  parties,  the  presumption  is  re- 
buttable, and  he  may,  therefore,  show  total  or  partial  de- 
ficiency or  insufficiency  of  assets,  and  thus  defeat  liability 
in  loto  or  2)ro  tanto ;  but  in  the  hands  of  a  "holder  for 
value,"  the  better  opinion  is  that  the  presumption  of  con- 
sideration would  be  conclusive.^ 

But  if  he  desires  to  exclude  all  personal  liability,  he  can 
do  so  by  restricting  his  promise  to  pay  "  out  of  the  assets 
of  C  D.,"  or  by  the  use  of  any  other  expression  of  similar 
import." 

§  119.  Power  to  transfer. — If  the  instrument  be  payable 
to  the  order  of  decedent,  the  personal  representative  may 
transfer  it  \)\  indorsement;  and  if  there  be  several  executors 
or  administrators,  the  title  may  be  transferred  by  the  indorse- 
ment of  any  one  of  them.^  While  it  has  been  held  other- 
wise where  the  note  was  made  payable  to  the  several  execu- 
tors for  a  debt  due  the  estate,  the  view  sustained  by  the 
weight  of  authority  seems  to  recognize  no  such  distinction.^ 

4  Wisdom  V.  Becker,  52  111.  34G;  Cornthwaite  v.  First  Nat.  Bank,  57 
Ind.   209. 

sSnead  v.  Coleman,  7  Gratt.  .303;  Boyd  v.  Johnson,  14  S.  W.  804. 

c  Bank  of  Troy  v.  Topping,  13  Wend.  273;  Rucker  v.  Wadlington,  5 
-J.  ,J.  Mar.sh.  238;  Steele  v.  McDowell,  9  Smedes  &  M.  193;  Byrd  v. 
Holloway,  6  Smedes  &  M.   199;  Edwards  on  Bills,  78. 

7  Snead  v.  Coleman,  7  Gratt.  303;  Kirkman  v.  Benham,  28  Ala.  501. 

sCahoun  v.  Moore,  11  Vt.  G04 ;  Mackay  v.  St.  Mary's  Church,  15 
R.  I.  121  ;  Dwight  v.  Newell,  15  111.  333;  Hertell  v.  Bogert,  9  Paige,  52. 

9  Smith  V.  Whiting,  9  Mass.  334;  Bogert  v.  Hertell,  4  Hill,  492;  1 
Parsons  on  Notes  and  Bills,  155;  Mackay  v.  St.  Mary's  Church,  15  R.  I. 
121. 


§^120,  IL'l.  AiiKXT.S    AS     I'ARTIKS.  75 

ij  120.  Guardians  and  trustees. — Guardians  cannot  bind 
their  wards'  estates,  nor  trustees  the  estates  of  their  centals 
que  truslent  by  bills  or  notes;  and  hence,  though  they  sign 
themseives  as  guardians  or  trustees,  they  are  personally 
bound,  because  otherwise  the  instrument  would  be  invalid.^" 
It  is  true  that  they  uuiy  contract  to  ])ay  out  of  an  estate; 
hut  then  the  ])ayui('nt  would  he  conditional  on  the  suffi- 
ciency of  the  estate,  and  the  instrument,  therefore,  not  nego- 
tiable.^^ If  a  guardian  take  a  note  payal)le  to  his  order  as 
guardian  for  the  property  of  his  ward,  and  indorse  it  to  a 
bona  fide  party  for  value,  it  has  been  held  that  it  is  a  good 
transfer,  the  words,  "  as  guardian,"  etc.,  being  mere  de- 
scriptio  personce}'  But  the  better  opinion  seems  to  be  that 
while  if  the  fiduciary,  indicated  as  payee,  may  transfer  a 
good  title,  provided  he  uu\kes  the  transfer  within  the  au- 
thority of  and  for  the  l)enefit  of  his  trust,  yet  that  such 
words  as  trustee,  etc.,  suffixed  to  a  payee's  name  put  his 
indorsee  upon  inquiry  as  to  the  title,  and  if  the  transfer  be 
in  fraud  of  the  trust,  the  indorsee  must  suffer  the  conse- 
quence.^^ 

SECTTOX  IT. 

AGENTS    AS    PARTIES. 

§  121.  All  persons  who  are  themselves  competent  to  be- 
come parties  to  a  negotiable  contract,  in  their  own  individual 
right,  can  do  so  through  the  instrumentality  of  an  agent. 

Three  things  are  essential  to  the  creation  of  an  obligation 
on  the  part  of  one  individual  by  and  through  the  act  of 
another,  viz.:  (1)  The  principal  himself  must  be  competent; 
(2)  the  agent  must  be  competent  to  act  as  such;  (3)  author- 
ity, express  or  implied,  verbal  or  in  writing,  must  be  con- 
ferred by  the  principal  u]iou  the  agent. 

10 Thatcher  v.  Dinsinoip.  .1  Mass.  299;  Webster  v.  Switzer,  15  Mo. 
App.  351:   Conner  v.  Clark.  12  Cal.  108. 

n  1   Parsons  on  Notes  and  Bills.  90;    Story  on    Hills,    S§   74.  75. 

laZollner  v.  Cleveland.  69  Cta.  (13.3:  Thornton  v.  Rankin,  19  Mo.   193. 

i::  Third  Nat.  Bank  v.  Lange,  51  Md.  138;  Shaw  v.  Spencer,  100  Mass. 
382. 


T()  I'KKSOXS    (JIALIKIKI).  §   ^ --• 

Knouii'li  has  licon  alroaily  said  with  rcforonco  to  the  ca- 
]m('ity  of  the  principal,  and  no  further  elaboration  on  that 
subject  is  deemed  necessary.  But,  referring  to  the  com- 
petency of  the  agent,  it  should  be  observed  that  it  is  not 
necessary  that  the  agent  should  be  himself  competent  to 
make  a  contract.  He  is  the  mere  instnmient  of  the  con- 
tracting capacity  and  will,  and  Mr.  Chitty  says:  "As  this 
agency  is  a  mere  ministerial  office,  infants,  feme  coverts, 
persons  attainted,  outlawed,  excommunicated,  aliens  and 
others,  though  incapable  of  contracting  on  their  OA\m  ac- 
count, so  as  to  bind  themselves,  may  be  agents  for  these 
purposes."  ^■* 

During  the  existence  of  slavery  in  the  United  States  it 
was  held  that  a  slave  might  be  an  agent. ^^  But  imbeciles, 
lunatics,  and  children  of  tender  years,  who  actually  lack 
capacity  to  be  intelligent  instruments,  and  have  not  the 
power  or  discretion  to  consent,  could  hardly  be  regarded 
as  competent  to  be  even  the  agents  of  another.^'^ 

§  122.  Express  authority. —  It  is  not  necessary  that  ex- 
press authority  should  be  granted  in  any  particular  form, 
unless  it  be  authority  to  execute  an  instrument  under  seal, 
in  which  case  it  also  must  be  under  seal.  Otherwise  the 
authority  may  be  written,  or  oral;  and  the  agent,  to  exe- 
cute or  indorse  a  negotiable  instrument,  needs  nothing  more 
than  verbal  authority  so  to  do,^'  though  it  was  once  thought 
that  a  formal  power  of  attorney  was  necessary.^^  It  is 
obvious,  however,  that  it  is  safer  for  one,  dealing  with  an 
alleged  agent,  to  recpiire  production  of  written  authonty; 
or  otherwise  unmistakable  oral  proof  that  authority  had 
been  given.  If  the  authority  is  in  writing,  it  cannot  be 
disputed  by  parol  proof  of  contrary  verbal  instructions  to 

14  Chitty  on  Bills  [''^.S],  .30.  See  Edwards  on  Bills,  95;  Coke's  Little- 
ton, 52a. 

15  Governor  v.  Daily,   14  Ala.  4G0. 

16  Thompson  on  Bills,   147. 

17  Chitty  on  Bills  [■^*2.S],  ?S:  Bettis  v.  Bristol,  56  Iowa,  41. 
i«:\rann  v.  Kin-r,  G  :\runf.  428. 


§§  123,  124.  AGENTS    AS    I'AKTIES.  77 

the  agent,  or  otlicnnsc;'"  besides,  it  proves  itself  whonevor 
produced,  and  its  genuineness  is  established. 

§  123.  Authority  "  by  procuration." —  AVhile  it  is  true,  as 
stilted  in  all  text-books  on  the  general  subject  of  contract 
law,  that  there  are  some  positions  of  agency  in  which,  in 
the  usual  course  of  business,  the  agent  may  draw,  indorse, 
or  accept  negotiable  instruments,  although  jiositively  against 
the  ])rineipars  instructions, —  /.  e.,  general  agents,  acting 
within  the  general  scope  of  their  authority  —  the  principle, 
however,  is  subject  to  this  limitation,  that  whenever  an 
authority  puqjorts  to  be  derived  from  a  written  instrument, 
or  the  agent  signs  the  ]iaper  with  the  words  "  by  procura- 
tion," in  such  a  case  the  party  dealing  with  him  is  l)Ound 
to  take  notice  that  there  is  a  written  instrument  of  procura- 
tion, and  he  ought  to  call  for  and  examine  the  instrument 
itself  to  see  whether  it  justifies  the  act  of  the  agent.  Under 
such  circumstances,  he  is  chargeable  with  in<iuii'y  as  to  the 
extent  of  the  agent's  authority;  and  if,  without  examining 
into  it  when  he  knows  of  its  existence  —  and  especially  if  he 
has  it  in  his  possession  —  he  ventures  to  deal  with  the  agent, 
he  acts  at  his  peril,  and  must  bear  the  loss  if  the  agent  tran- 
scended his  authority.^*^  But  no  such  duty  exists  to  make 
inquiry  respecting  private  instructions  to  the  agent  from  his 
])rincipal,  whether  written  or  oral,  for  they  may  well  be  pre- 
sumed to  be  of  a  secret  and  confidential  nature.^^ 

§  124.  Implied  authority  from  express  authority. —  From 
the  express  authorization  by  the  principal,  the  law  will  im- 
ply such  additional  power  and  authority  as  may  be  abso- 
lutely necessary  to  effectuate  the  intention  of  the  principal 
and  to  fully  execute  that  which  is  expressed.  Thus,  when 
the  authority  to  execute  or  indorse  a  negotiable  instrument 
is  sought  to  be  deduced  from  an  agency  to  do  certain  other 
acts  it  must  l)e  made  to  appear  affirmatively  that  the  sign- 
ing or  indorsement  of  such  an  instrument  was  within  the 

19  Thompson  oTi  Bills,  147,  148. 

3)StainI)n(k  v.  Bank  of  Virfiinia.  11  Gratt.  2r)0 ;  North  Rivor  Bank 
V.  Aymar.  ."?  Hill.  2C>2. 

21  North  River  Bank  v.  Ayinar,  ;5  Hill.  2G2;  Story  on  Agency,  §  73. 


7S  rERSO>^S    QUALIFIKD.  §  ll^T). 

general  objects  and  }uiri)Oscs  of  •  the  authority  which  was 
actually  coufeiTed.  And  in  interi)reting  the  authority  of 
the  agent,  it  is  to  be  strictly  consti-ued.^"  Thus  a  general 
authonty  to  transact  business  for  the  principal,  will  not  au- 
thorize the  agent  to  bind  him  as  a  party  to  negotiable  pa- 
per, according  to  many  authorities,  and  the  general  principles 
of  the  law  of  agency.^''  It  has  been  held  that  authority  to 
transact  all  business  for  the  principal,  would  empower  the 
agent  to  transfer  a  negotiable  instrument  in  his  principal's 
name;^"*  but  the  weight  of  authority  is  to  the  contrary.^'"' 
Authority  to  conduct,  in  one's  place  and  stead,  his  commer- 
cial business,  and  sign  the  principal's  name  whenever  re- 
([uisite  or  expedient  in  the  attorney's  good  discretion,  would, 
however,  be  broad  enough  to  cover  cases  of  dra\ving  bills 
of  exchange,^*^  and  so  likewise  authority  to  act  "  as  lawful 
cashier  and  financial  agent."  "^ 

§  125.  Authority  implied  from  custom. —  If  the  principal 
stand  by  and  tacitly  concur  in  the  act  of  the  agent  signing 
his  name,  he  would  be  as  strictly  bound,  as  if  he  had  ex- 
pressly authorized  the  agent  so  to  do.  So,  authority  may  be 
implied  from  the  course  of  business  and  employment,  or 
from  repeated  recognitions  by  the  principal  of  the  agent's 
authority.^  Thus,  where  a  drawee  had  previously  paid,  sev- 
eral bills  accepted  in  his  name  by  a  third  person,  with  whom 
he  had  connections  in  trade,  he  would  be  liable  to  an  in- 
dorsee, although  the  bill  accepted  in  like  manner  had  been 
so  accepted  without  his  authority."^  And  it  has  been  held 
that  if  a  person  usually  subscribes  a  negotiable  instrument 
with  the  name  of  another,  proof  of  his  having  done  so  in 

22Byles  on  Bills  [*32],  108;  Sewanee  Mining  Co.  v.  McCall,  3  Head, 
G19. 

23  Sewanee  Mining  Co.  v.  McCall,  3  Head,  GIO;  Chitty  en  Bills  [*29, 
30],   39. 

24  r?ailey  v.  Ravvley,   1   Swan,  205 ;   Frost  v.  Wood,  2  Conn.  23. 
2.-jKilgour   V.   Finlayson,    1    H.    Bl.    155;    Hay   v.   Goldsmidt,   2   J.    P. 

Smith,   79. 

2iiDollfus  V.  Frosch,  1  Den.  368. 

2rEdward.s  v.  Thomas.  C6  Mo.  482. 

28  Lake  Shore  Nat.  Bank  v.  Colliery  Co.,  58  N.  Y.  Supp.  G3. 

20  Barber  v.  Cxingell,  3  Esp.  61:  Stroh  v.  Hinchman,  37  Mich.  490. 


§§   12('i,   127.  AGENTS    AS    I'AUTIES. 


i9 


luaiiy  instances  is  sufficient  to  charge  the  party  whose  name 
is  subscribed,  without  producing  any  power  of  attonicy  or 
other  proof  of  a^-ency.^  But  when  it  is  sought  to  bind 
the  principal  on  the  ground  of  prior  sindhir  transactions, 
or  recognition  of  such  acts  by  the  piincipal,  it  must  he 
shown  that  the  bill  or  note  was  taken  upon  the  faith  of 
thcm.''^ 

§  126.  How  agent  should  sign. —  The  best  mode  for  an 
agent  to  sign  or  ind(U-sc  a  negotiable  instniment  for  his 
principal,  so  that  it  may  clearly  appear  that  he  is  "  the  mere 
scribo  "  who  applies  the  executive  hand  as  the  instnmient 
of  another,  is  as  follows:  "A.  B.,  by  his  attorney  or  agent, 
C.  D.;  "  or,  ''  A.  B.,  by  C.  D.,  agent;  "  or,  "  C.  D.,  for  A. 
B.; "  or,  "  C.  D.,  agent  for  A.  B."  "" 

But  it  is  competent  and  proper  also  for  the  agent  to  sign 
simply  the  principal's  name,  and  to  show  his  authority  to 
do  so  by  extraneous  evidence  ;^^  for,  as  said  by  the  United 
States  Supreme  Court,  per  Johnson,  J.:  ''  It  is  by  no  means 
time  that  the  acts  of  agents  derive  their  validity  from  pro- 
fessing on  the  face  of  them  to  have  been  done  in  the  exer- 
cise of  their  agency."  ^*  Btit  this  style  is  not  favored,  as 
it  increases  the  difficulties  of  proof,  and  at  one  time  was 
questioned.^^ 

§  127.  Undisclosed  principal. —  It  is  a  general  principle  of 
connnercial  law  that  a  negotiable  instrument  must  wear  no 
mask,  but  must  reveal  its  character  upon  its  face.  And  it 
extends  to  the  liability  of  parties  thereto,  Avho  must  appear 
as  distinctly  as  the  tenns  of  the  ius^trument  itself,  in  order 
to  be  bound  thereby.      It  follows,  therefore,  that  no  party 

SONcal  V.  Irving.  1  Esp.  Gl ;   Haughton  v.  Ewbank,  4  Canipb.  188. 

31  St.  John  V.  Redmond,  9  Port.  428 ;  Edwards  on  Bills,  89. 

33Bradlce  v.  Boston  Glass  Co.,  46  Pick.  347:  Weaver  v.  Carnall.  35 
Ark.  198;  1  Parsons  on  Notes  and  Bills,  91;  Tannant  v.  Rocky 
Mountain  Nat.   Bank,  1  Colo.  278. 

:53  0dd  Fellows  v.  First  Nat.  Bank,  42  Mich.  4()3 ;  First  Nat.  Bank  v. 
Gay,  G3  Mo.  33. 

34  Mechanics'  Bank  v.  Bank  of  C'olunihia.  5  Wheat.   326. 

35  1   Parsons  on  Notes  and  Bills.  91,  92. 


80  TERSOXS    QUALIFIED,  §  128. 

can  be  charged  as  principal  npon  a  negotiable  instrument 
unless  his  name  is  disclosed  thereon.  The  reason  of  this 
rule  is  that  each  party  who  takes  a-  negotiable  instrument 
makes  liis  contracts  ^^•ith  the  parties  who  appear  on  its  face 
to  be  bound  for  its  payment;  it  is  "a  courier  without  lug- 
gage," whose  countenance  is  its  passport;  and  in  suits  upon 
negotiable  instruments,  no  evidence  is  admissible  to  charge 
any  person  as  a  principal  party  thereto,  unless  his  name  in 
some  way  is  disclosed  upon  the  instrument  itself  ;^*^  although 
upon  other  written  contracts,  not  negotiable,  it  is  often  com- 
petent to  show  that,  although  signed  in  the  name  of  the 
agent  only,  they  were  executed  in  the  business  of  the  prin- 
cipal, and  with  the  intent  that  he  should  be  bound.  And 
in  such  cases  he  is  bound  upon  them  accordingly.^^  The 
rule  excluding  parol  evidence  to  charge  an  unnamed  prin- 
cipal as  a  party  to  negotiable  paper  is  derived  from  the  na- 
ture of  such  paper,  which  being  made  for  the  purpose  of 
being  transferred  from  hand  to  hand,  and  of  giving  to  every 
successive  holder  as  strong  a  claim  upon  the  original  party 
as  the  payee  himself  has,  must  indicate  on  its  face  who  is 
bound  for  its  payment;  for  any  additional  liability  not  ex- 
pressed in  the  ]"»aper  would  not  be  negotiable.^^ 

§  128.  When  agent  individually  bound. —  If  the  agent  sigii 
a  note  with  his  own  name,  and  discloses  no  principal,  he  is 
personally  bound.  The  party  so  signing  must  have  intended 
to  bind  somebody  upon  the  instrument,  and  no  promisor 
but  himself  thereon  appearing,  it  must  be  construed  as  his 
note  or  as  a  nullity.^^  And  though  he  term  himself  "  agent," 
such  suffix  to  his  name  will  be  regarded  as  a  mere  descriptio 
personce,  or  as  an  earmark  of  the  transaction,  and  may  be 
rejected  as  surplusage.*^ 

saCragin  v.  Lovoll.  109  U.  S.  194;  Texas  Latid  Co.  v.  Carroll,  63  Tex. 
51;   Brown  v.  Baker,  7  Allen,  339. 

37  Lerned  v.  Johns,  9  Allen,  419;  Leavens  v.  Thompson,  55  N.  Y. 
Supp.  391. 

38  Webster  v.  Wray,  19  Nebr.  558;  Heaton  v.  Myers,  4  Colo.  62. 

39  Arnold  v.  Htackpole,  11  Mass.  27;  Sharpe  v.  Bellis,  Gl  Pa.  St.  71; 
Finan  v.   Babcock,  58  Mich.  305. 

40  Toledo  Iron  &  Agr.  Works  v.  Ileisser,  51  Mo.  128;  Arnold  v. 
Sprague,  34  Vt.  409. 


§§   120,   130.  AGENTS    AS     I'AKTIKS.  81 

If  the  agent  exceed  his  authority  in  signing  his  principal's 
name,  or  sign  his  own  professedly  as  binding  his  principal, 
who  is  named,  he  is  not  bound  as  a  party  to  the  paper  itself, 
but  only  in  an  action  of  tort  for  falsely  assuming  authority 
to  bind  another.  Upon  this  proposition  the  authorities  are 
not  uniform,  but  ihc  weight  of  reason,  if  not  authority,  is 
clearlv  in  its  favcr,  both  in  luiglaiid  and  in  the  United 
v^tates."' 

§  129.  Ratification. —  A  corporation,  as  w^ell  as  an  indi- 
vidual, may  ratify  the  acts  of  another,  when  such  acts  are 
done  and  performed  in  the  name  of  the  alleged  principal; 
and  the  ratification  may  be  by  express  consent,  or  by  con- 
duct of  the  alleged  principal  inconsistent  ^\•ith  any  other 
hypothesis  than  that  he  approved  and  intended  to  adopt 
what  had  been  done  in  his  name.  Intelligent  acquiescence 
amounts  to  a  binding  ratification.^ 

Three  things  are  essential  to  a  ratification:  (1)  The  party 
nmst  have  capacity  to  have  made  the  contract  in  the  par- 
ticular mode  adopted;  (2)  the  principal  nmst  have  known  all 
of  the  facts  attending  the  transaction;  (3)  the  contract  must 
have  been  originally  lawful.''^ 

§  130.  Revocation  of  agency. —  A  general  authority  to  an 
agent  is  presumed  to  continue  until  its  revocation  is  gener- 
ally known.  And  if  A.  is  the  agent  of  B.  to  dra\v  bills  in 
his  name,  B.  will  be  liable  as  drawer  to  ignorant  indorsees, 
M-ho  had  no  knowledge  of  the  change  in  the  relationship 
of  the  parties,  or  of  the  revocation  of  the  agency.'*'* 

Death  or  insanity  operates  as  a  revocation  of  all  agencies 
not  coupled  with  an  interest  vested  in  the  agent ;^^  but  war  be- 
tween the  countries  of  the  principal  and  the  agent  does  not.**' 

41  Daniel  on  Negotiable  Instruments,   §   300,  and  cases  cited. 

42  Knox  County  v.  Aspinwall,  21  How.  544;  Supervisors  v.  Schenck, 
5  Wall.  782;  Bissell  v.  Jeffersonville,  24  How.  299;  Daniel  on  Nego- 
tiable Instruments,   §  317. 

« Daniel  on  Negotiable  Instruments,  §§  318-320. 

•44Chitty  on  Bills  [*32].  42;  Story  on  Agency.  SS  470,  473;  Smith  v. 
Stranger,  Peake  Add.   116. 

45  1   Parsons  on  Contracts,  71. 

4G  Daniel  on  Negotiable  Instruments,   §  222. 

G 


82  ri:RSo>;s  quat.ified.  §§  131,  1:12. 

§  131.  Banks  as  collecting  agents. —  For  tlie  couveuicuce 
of  the  mercantile  world  banks  are  frequently  made  the  col- 
lecting agents  for  the  owners  or  holders  of  commercial  pa- 
per. But  the  mere  fact  that  a  bill  or  note  is  made  payable 
at  a  bank  does  not  of  itself  confer  any  agency  upon  the 
bank,  on  the  part  of  the  payee,  to  receive  the  amount.  In 
order  to  make  the  bank  the  payee's  agent  to  receive  the 
money,  the  paper  must  be  indorsed  to,  or  lodged  with,  it,  for 
collection,  or  it  must  have  received  authority  from  the  payee 
to  collect  the  amount  due  ;^'^  and  without  such  circumstances 
or  such  authority  any  amount  which  the  bank  receives  to 
apply  in  payment,  it  ^^^ll  be  deemed  to  have  taken  as  the 
agent  of  the  payor. ^^ 

§  132.  Duty  of  collecting  agent  to  present  for  acceptance 
and  for  payment. —  It  is  the  duty  of  the  bank,  as  soon  as 
the  l)ill,  note,  or  check  is  placed  in  its  hands  for  collection, 
to  take  the  appropriate  steps  necessary  to  its  prompt  ]iay- 
ment  or  prom})t  acceptance,  by  making  presentment  for  ac- 
ceptance without  delay,  and  presentment  for  payment  at 
maturity.  And  if  the  instrument  be  not  duly  accepted  or 
paid,  the  l)ank  must  take  all  necessary  steps  to  fix  the  lia- 
bility of  the  drawer,  if  it  be  a  foreign  bill,  by  placing  it  in 
the  hands  of  a  notary  for  protest,  and  by  giving  due  notice 
of  its  dishonor  to  the  party  wdio  indorsed  the  instnmient 
to  it  for  collection,  whether  it  be  a  bill  or  note,  inland  or 
foreign.  If  the  bank  fail  in  any  of  these  duties,  it  becomes 
immediately  liable  in  damages  to  the  holder.^^  Assuming 
that  the  collecting  bank  properly  and  promptly  discharges 
its  duty  as  to  presentment  for  acceptance  and  for  payment, 
it  is  not  bound  to  pay  the  amount  of  a  bill,  note,  or  check 
placed  in  its  hands  for  collection  to  the  holder,  until  such 
amount  is  received,  or  would  be  received  but  for  the  default 
of  itself  or  some  agent  for  whose  act  it  is  responsible.^*^     It 

47  Caldwell   v.   Evans,  5  Bush,   380;   Balme  v.  Wambaujjh,    16   :\rinn. 
120;  Glatt  v.  Fortman,  120  Ind.  .385. 

48  Ward  v.  Smith,  7  Wall.  447;   Pease  v.  Warren.  20  Mich.  9. 

49  Allen  V.  Merchants'  Bank,  22  Wend.  215;  Rmedcs  v.  Bank  of  Utica, 
20  .Johns.  .372;  Blane  v.  Mutual  Nat.  Bank,  28  La.  Ann.  921. 

soBriggs  V.  Cent.  Nat.  Bank,  89  N.  Y.  184. 


§§   133,   134.  I'AUTXKUS    AS     I'AKTIES.  80 

is  frequently  the  case  that  for  the  accommodation  of  cus- 
tomers they  are  i)ermitted  to  draw  before,  and  in  antici- 
pation of,  the  reception  of  such  amounts.  But  this  habit 
is  mere  favor,  and,  though  long  continued,  gives  the  cus- 
tomer no  right  to  (leniand  that  it  be  done  in  any  particular 
case." 

§  133.  Ownership  of  paper  in  hands  of  collecting  bank. — 
A  variety  of  circumstances  give  rise  to  controversies  as  to 
the  right  to  claim  paper,  or  the  proceeds  of  paper,  wliich 
was  put  in  bank  to  be  collected. 

AVlicn  the  holder  ]daces  his  paper  in  bank,  he  usually 
does  so  in  one  of  three  ways:  First.  As  a  principal  em- 
ploying the  bank  as  a  mere  agent  for  collection,  in  which 
case  the  restrictive  indorsement  "  for  collection "  is,  or 
should  always  be,  used,  so  that  all  subsequent  holders  may 
be  advised  of  the  bank's  want  of  title.  This  is  the  form  of 
indorsement  generally  used  when  the  holder  is  not  a'  cus- 
tomer  of  the  bank.  Second.  As  an  avowed  seller  to  the 
bank,  in  which  case  the  indorsement  is  in  blank  and  the 
transaction  a  plain  one.  Third.  As  a  customer  having  an 
account  with  the  bank,  in  which  case  the  restrictive  indorse- 
ment is  or  is  not  employed,  according  to  the  relations  estab- 
lished by  agreement  between  the  parties.  If  the  bank  treats 
the  paper  as  a  cash  deposit,  and  allows  the  customer  to 
draw  against  it  in  anticipation  of  the  collection,  the  indorse- 
ment is  generally  in  blank.^^ 

SECTIOX  III. 

PARTNERS    AS    PARTIES. 

§  134.  General  authority  of  partner  to  bind  firm. —  The 
general  authority  of  a  partner  to  bind  the  firm  springs  from 
the  mutual  agency  of  the  copartners  for  each  other;  and 
from  the  course  and  usage  of  the  business  in  which  they  are 
engaged.  It  follows,  therefore,  that  a  person  contemplating 
]->artnersliip  \rith  another  cannot,  ^rithout  a  special  author- 

51  Scott  V.  Ocean  Bank,  23  N.  Y.  280 :   Morso  on  Banking.  365. 
C2  Daniel  on  Negotiable  Instruments,  §   340a. 


84  TERSOXS    QUALIFIED.  §§  135,  136. 

ity.  l)in(l  liiiu  1)V  a  contract  for  the  proposed  ])artuersliip 
benefit  — •  for  example,  for  the  purpose  of  raising  capital  — 
his  agency  not  commencing  until  the  connection  is  consum- 
mated.'^-'^ The  copartnership  being  formed,  the  copartner 
can  bind  liis  associates  only  in  such  transactions  as  pertain  to 
their  partnership  business;  and  the  copartnership  business 
must  be  of  such  a  character  that  the  giving  of  negotiable 
paper  would  be  the  convenient  and  proper  mode  of  conduct- 
ing it,  in  order  to  create  the  presumption  of  agency  in  a 
copartner  to  give  a  bill  or  note  in  the  finn's  name. 

§  135.  Implied  authority  of  partner  to  bind  the  firm. —  It 
results  from  the  very  nature  of  partnership  —  from  the 
very  fact  that  the  copartners  are  mutual  general  agents  for 
each  other  in  their  copartnership  affairs  —  that  the  express 
assent  of  one  to  the  act  of  another  within  the  scope  of  their 
business  is  unnecessary.  The  authority  to  each  partner  is 
implied  to  bind  the  firm  \\dtliin  the  legitimate  scope  of  its 
business  by  the  very  fact  that  it  is  a  firm,  and  it  has  been 
said  by  Lord  Ellenborough,  C.  J. :  "  It  would  be  a  strange 
and  novel  doctrine  to  hold  it  necessary  for  a  person  receiv- 
ing a  bill  of  exchange  indorsed  by  one  of  several  partners, 
to  know  whether  the  others  assented  to  such  indorsement 
or  that  it  should  be  void."  ^* 

§  136.  Trading  partnerships. —  The  borrowing  of  money 
and  negotiation  of  bills  and  notes  being  incidental  to,  and 
usual  in,  the  Imsiness  of  copartnerships  fonned  for  the  pur- 
pose of  trade,  it  follows  that  when  a  copartner  borrows 
money  professedly  for  the  firm,  and  executes  therefor  a 
negotiable  instrument  in  the  copartnership  name,  it  will 
bind  all  the  partners,  whether  the  borrowing  were  really 
for  the  firm  or  not,  and  whether  he  diverts  and  misapplies 
the  funds  or  not,  provided  the  lender  is  not  liimself  cogni- 
zant of  the  intended  fraud.     And  the  burden  will  not  be 

fJ-T  Bank  of  Fort  Madison  v.  Alden,  129  U.  S.  373;  Greensdale  v. 
Domer,  7  B.  &  C.  635. 

54  Swan  V.   Steele,  7  East,  210;   Fulton  v.  Loughlin,  118   Ind.   286. 


§   137.  J'AKTNKIt.S    AS     I'AIMIKS.  85 

tlu-owii  Mil  liiiu  to  show  that  lie  was  not  cognizant  of  such 
fruud,  or  to  pi-ovc  value  ^ivcii  for  the  paper.^"' 

§  137.  Nontrading  partnerships. —  In  general,  it  may  be 
said  that  if  the  jtartnership  be  a  iiontrading  one,  there  is 
no  ini])lied  agency  or  authority  in  one  i)artner  to  signi  tho 
tirni  name,  and  thus  liind  the  partnership,  without  express 
authority  from  all  the  members  thereof.  Hence,  the  United 
States  Supreme  Court  has  held  that  a  hill  dra\\Ti  by  a  part- 
ner in  the  name  of  a  firm  engaged  in  farming,  working  a 
steam  sawmill,  and  in  trading,  was  binding,  because  trad- 
ing and  running  the  mill  required  capital  and  the  use  of 
credit;  but  if  the  finn  had  been  engaged  in  farming  alone, 
no  one  partner  could  have  bound  it  by  a  bill  or  note.^  A 
firm  engaged  in  manufacturing  lumber  from  logs,  has  been 
considered  noncommercial,  and  that  one  of  the  partners 
could  not  bind  the  other  by  a  nbte.^^  So,  also,  one  engaged 
in  the  real  estate  and  collecting  business  ;^^  so,  also,  one 
dealing  as  coffee-brokers,  in  the  absence  of  custom  or  usage 
to  the  contrary.^^  Upon  these  principles  one  of  a  law  firm 
cannot  bind  it  by  a  promissory  note  without  consent  of  all  the 
members;*'*^  nor  can  one  of  a  firm  practicing  medicine  bind  it 
in  a  like  manner  except  for  medicine  and  other  necessaries 
of  his  profession;*'^  nor  can  one  of  a  firm  keeping  a  tavern 
bind  his  copartners  except  strictly  within  the  business.*'^  It 
is  said,  however,  that  if  the  concerns  were  of  such  vast  mag- 
nitude as  to  require  large  capital  and  credit,  tho  rule  would 
be  of  doubtful  application,  and  that  it  would  depend  very 
much  upon  the  usage  of  the  particular  finn  and  others  simi- 
larly  engaged.*'^     The  general  authority  of  a  partner  to  bind 

M  Hay  ward  v.  French,  12  Gray,  453;  United  States  Bank  v.  Bonney, 
5  Mason,  170;   Spauldintr  v.  Kelley,  50  N.  Y.  Supp.  244. 

scKimbro  v.  BuUit.  22  How.  250. 

r>7  National  State  Capital  Bank  v.  Xoycs,  02  N.  H.  44. 

58Deardorff  v.  Thacher,  78  Mo.  128. 

59  Third  Nat.  Bank  v.  Snyder,  10  Mo.  App.  211. 

eOHedley  v.  Baiiihridge,  .3  Q.  B.  310;   :Marsh  v.  Gold.  2  Pick.  285. 

BlCrosthwait  v.  Ross,  1  Humphr.  23;  Edwards  on  Bills.  102. 

G2  Cooke  V.  Branch  Bank.   3  Ala.   175. 

«3  1  Parsons  on  Notes  and  Bills,  13!);  National  State  Cap.  Bank  v. 
Noyes,  G2   N.  H.  44. 


86  PEKSOXS    QUALIFIED.  §§  138,  139. 

the  finii  exists  onl}'  Ly  implication,  and  may  be  rebutted  by 
evidence  that  the  party  who  took  the  security  had  pre^dous 
notice  that  no  such  authority  existed.^ 

§  138.  As  to  accommodation  paper. —  No  one  member  of  a 
firni  can  bind  it,  ^^•ithout  the  consent  of  all  of  its  members, 
by  signing-  the  copartnership  name  as  drawer,  maker,  ac- 
ceptor, or  indorser  of  a  negotiable  paper  for  his  private 
accommodation  or  for  the  accommodation  of  a  third  party, 
for  the  obvious  reason  that  such  a  transaction  is  not  ^vithin 
the  scope  of  copartnership  business,  unless  expressly  or  im- 
pliedly made  so,  and  would  ordinarily  be  without  authority, 
and  in  fraud  of  the  firm.  And  every  holder  of  such  paper, 
chargeable  M-ith  notice  of  its  character,  would  be  disqualified 
to  recover  upon  it;^^  and  if  the  plaintiff  be  payee,  he  would 
be  required  to  prove  the  assent  of  the  copartners  before  he 
could  do  so.*^ 

If  it  appears  on  the  face  of  the  bill  or  note  that  it  was 
signed  by  a  partner,  in  the  name  of  the  firm,  as  surety,  this 
will  be  notice  to  the  world  that  it  was  not  given  in  due 
course  of  the  partnership  business;  and  the  burden  would 
bo  thrown  upon  the  holder  not  only  to  show  that  he  gave 
value  for  the  instrument,  but  also  that  all  the  parties  as- 
sented to  its  execution  in  their  name.^  If  the  word  "  surety  " 
be  attached  to  the  partnership  name,  that  would  impress 
upon  the  paper  notice  of  its  character.*'"^ 

§  139.  As  to  private  debts  of  a  member  of  the  firm. —  ITo 
one  member  of  a  firm  can,  without  the  consent  of  all  of 
his  copartners,  bind  them  by  making,  drawing,  accepting,  or 
indorsing  a  bill,  note,  or  check  for  his  private  debt,  in  the 
partnership  name;  and  the  creditor  who  receives  such  an 
instrument,  or  the  indorsee  who  takes  it  with  notice  of  the 
consideration,  cannot  recover  upon  it.^^     Accordingly,  it  has 

«4Gallway  v.  Matthews,  10  East,  264;  King  v.  Faber,  22  Pa.  St.  21. 
csBank  of  Fort  Madison  v.  Alden,   129  U.  S.   372;   Heffron  v.  Hana- 
ford,  40  Mich.  405. 

66  Tompkins  v.  Woodward,  5  W.  Va.  230. 

67  National  Bank  v.  Law,  127  Mass.  72;   Tyree  v.  Lyon,  07  Ala.   1. 

68  Foot  V.  Rabin,  19  .Johns.  1.54;  Boyd  v.  Plumb,  7  Wend.  309. 

69  Daniel  on  Negotiable  Instruments,   §  3G6. 


§§   140,   141.  PAItTNKKS     AS     I'AUTIKS.  87 

Itoc'ii  liekl  that  where  a  creditor  drew  on  his  debtor  through 
hank  for  an  indivi(hial  debt,  and  the  debtor  gave  the  check 
of  the  firm  to  which  he  behjuged  in  payment,  the  creditor 
was  held  chargeable  with  notice  of  the  misappropriation  by 
the  very  nature  of  the  transaction,  and  througli  the  bank 
as  his  agent."^*"  But  in  Nebraska  a  different  conclusion  has 
been  reached.''^ 

§  140.  Effect  of  dissolution. —  The  dissolution  of  a  partner- 
ship may  occur  by  agreement  between  the  partners;  by  a 
change  in  the  membersliip  of  the  firm,  by  the  retirement  of 
one  or  more  of  the  partners;  and  by  operation  of  law.  The 
death  or  bankruptcy  of  a  partner  are  the  most  familiar  in- 
stances of  dissolution  by  operation  of  law,  and  as  a  general 
rub'  it  is  well  settled  that  in  those  cases  no  notice  is  neces- 
sary to  exonerate  the  estate  of  the  deceased  or  bankrupt 
partner  from  liability  for  future  acts  done  by  other  mem- 
bers in  the  name  of  the  dissolved  firm."^-  Nor  is  notice 
necessary  when  a  dormant  partner  retires,  for  he  has  not 
been  held  out  as  a  member  of  the  firm."^^  But  when  dis- 
solution occurs  by  agreement  between  the  partners,  or  by 
retirement  of  one  or  more  of  them,  notice  of  dissolution 
is  necessary  to  avoid  liability  for  future  transactions  in  the 
finn  name.  And  the  general  principles  stated  may  be  af- 
fected by  peculiar  circumstances.  Thus,  if  a  dormant  part- 
ner is  kno^\ai  to  certain  individuals  to  have  been  a  partner 
lu'  must  notify  them  of  his  retirement,  to  avoid  future  lia- 
l)ility  for  acts  of  the  firm."^^  And  continuing  members  ^rill 
be  bound  by  the  acts  of  a  bankrupt  partner  in  the  firm's 
name  if  they  hold  themselves  out  as  still  in  partnership 
with  him.'^^ 

§141.  Dissolution  by  agreement,  or  by  death;  compared. — 
AVhen  the  dissolution  has  been  effected  by  retirement  or 

vo  Davis  V.  Smith,  27   Minn.  390. 
"1  Warren  v.  Martin,  24  Nebr.  273. 

T2  Dickinson  v.  Dickinson,   25  Gratt.   321;    WilliaiuH  v.  Mathe\T3,   14 
La.   Ann.   11. 

73  Carter  v.  Whalley,  1  B.  &  Ad.  11. 

74  Davis  V.  Allen,  3  N.  Y.  IGS;  Cregler  v.  Durham,  9  Ind.  375. 

75  Lacy  v.  Woolcot,  2  Dowl.  &  R.  438. 


88  PKKSOXS    QUALIFIED.  §  142, 

agreement,  one  cx-partner  has  no  implied  autliority  to  in- 
dorse in  the  partnership  name  negotiable  instnunents  given 
to  the  firm  before  dissolntion.  As  was  said  by  Lord  Ivenyon, 
"  the  moment  the  partnership  ceases,  the  partners  become 
distinct  persons;  they  are  tenants  in  common  of  the  partner- 
ship property  undisposed  of  from  that  period;  and  if  they 
send  any  securities  -which  did  belong  to  the  partnership  into 
the  world  after  such  dissolntion,  Pil  must  join  in  so  doing."  '*^ 
But  where  the  dissolution  is  by  the  death  of  one  of  the 
partners,  the  sur^^vor  may  indorse  a  note,  payable  to  the 
iinn  in  his  ovra  name.'^^  The  reason  of  the  distinction  be- 
tween the  authority  of  a  partner  after  dissolution  while 
his  copartner  is  living,  and  the  authority  of  the  sundvor 
when  dissolution  has  been  caused  by  death,  is  that  in  the 
former  case  the  implied  authority  for  one  partner  to  act  is 
all  gone;  whereas  in  the  latter  case  the  bill  or  note  vests 
exclusively  in  the  survivor,  although  he  must  account  there- 
for as  part  of  the  partnership  assets.'^  And  for  the  like 
reason  the  surviving  partner  may  draw  a  check  on  partner- 
ship funds  to  pay  a  firm  debt.^^ 

SECTIOX  IV. 

CORPOBATIONS  AS  PARTIES. 

§  142.  Public  and  private  corporations. —  Corporations  are 
either  private  or  puljlic  —  public  when  "  the  whole  interests 
and  franchises  are  the  exclusive  property  and  domain  of  the 
government  itself; ."  otherwise  private.  Public  coi*porations 
are  established  exclusively  for  public  purposes,  and  com- 
prise cities,  to\\Tis,  villages,  counties,  to\vnships,  parishes, 
and  all  other  corporations  erected  by  the  government  as 
governmental  agencies.  Private  corporations  comprise 
banks,  building  associations,  railroad  companies,  and  all  other 

76  Abel  V.  Sutton,  3  Esp.  109. 

77  .Johnson  v.  Berlizheimer,   84  111.  .54. 

78  Story  on  Xotes,  §   125;  Crawshay  v.  Collins,  15  Ves.  218. 

79  Commercial  Nat.  Bank  v.  Proctor,  98  111.  558;  Daniel  on  Nego- 
tiable Instruments,  §§  370a,  3706. 


§§  143,  144.  COIMM  (RATIONS    AS     PARTIES.  89 

associations  formetl   for  manufacturing,   trading,    or  other 
objects  of  private  gain,  oiuolnnient,  gratification,  or  benefit.**"^ 

§  143.  Authority  of  private  corporations. —  It  is  quite  easy 
to  Jeteruiinc  whether  or  not  there  is  express  power  in  loti- 
dem  verbis  to  issue  the  particular  instrument  by  consulting 
the  terms  of  the  corporate  charter.  If  not  expressed,  then 
the  in(piiry  arises,  is  the  power  imphed  in  some  power  con- 
ferred, or  from  the  general  character  of  the  institution? 
In  England  the  rule  is  well  established  that  trading  and 
banking  corporations  only  can  draw  or  accept  bills  of  ex- 
change, or  otherwise  become  parties  to  a  negotiable  contract, 
\\dthout  express  authority  to  do  so  —  the  principle  being 
that  such  acts  by  trading  and  banking  corporations  are 
necessary  to  the   very  objects  of  their  existence.®^ 

In  the  United  States,  however,  the  cases  go  to  great 
lengths  in  upholding  the  validity  of  coiiiorate  negotiable 
instruments.  Here  "  the  power  of  coi-porations  to  become 
parties  to  bills  of  exchange  or  promissory  notes  is  coexten- 
sive ^\dth  their  power  to  contract  debts.  "Whenever  a  cor- 
poration is  authorized  to  contract  a  debt  it  may  draw  a  bill 
or  give  a  note  in  payment  of  it.  Every  coq)oration,  there- 
fore, may  become  a  party  to  bills  or  notes  for  some  pur- 
poses. Thus,  a  mere  religious  coi'poration  may  need  fuel 
for  its  rooms,  and  as  an  economical  measure  may  buy  a  cargo 
of  coal,  and  give  its  note  for  it;  and  such  a  note  would  un- 
doubtedly be  valid  in  this  c-ountrv."  ^^ 

§  144.  The  American  doctrine  stated. —  In  this  country 
three  propositions  respecting  ])rivate  corporations  may  be 
regarded  as  settled.  First.  That  it  has  implied  power  to 
contract  debts  like  an  individual  whenever  necessary  or  con- 
venient in  furtherance  of  its  legitimate  objects.  Second. 
That  whenever  it  may  contract  a  debt,  it  may  borrow  money 
to  pay  it.  And,  Third.  That  Avhenever  it  contracts  a  debt 
for  materials,  sersnces,  or  otherwise,  in  the  scope  of  its  busi- 

80  Daniel  on  Xepjotiablc  Instrllment^^,  §  379. 

81  Bioughton  V.  :Manchester  &  8.  Waterworks,  3  B.  &  Aid.  1. 

S2  1  Parsons  on  Xotes  and  Bills,  1G4,  165;  Daniel  on  Negotiable  In- 
struments, §§  380,  381. 


00  PERSONS    QUALIFIED. 


§145 


ness,  or  borrows  money,  it  may  execute  a  negotiable  bill, 
note,  or  bond,  and  secure  it  by  mortgage,  to  the  creditor  in 
payment. ^^ 

And  in  accordance  Avitli  the  propositions  just  announced, 
it  Avas  said,  in  a  well-considered  case,  that  "■  the  right  of  cor- 
porations in  general  to  give  a  note,  bond,  or  other  engage- 
ment to  pay  a  debt  is  so  nearly  identical  or  so  inseparably 
connected  vriih  the  right  to  contract  the  debt,  that  no  doubt 
upon  the  question  ought  to  be  admitted.  When  a  corpora- 
tion can  lawfully  purchase  property,  or  procure  money  on 
loan  in  the  course  of  its  business,  the  seller  or  the  lender 
may  exact,  and  the  purchaser  or  borrower  must  have,  the 
power  to  give  any  known  assurance  which  does  not  fall 
v/ithin  the  prohibition,  express  or  implied,  of  some  statute. 
The  particular  restriction  must  be  sought  for  in  the  charter 
of  the  corporation,  or  in  some  other  statute  binding  upon 
it;  but  if  not  found  in  that  examination,  we  may  safely 
affirm   that  it  has  no   existence."  ^ 

§  145.  Presumption  of  regularity. —  Wlien  a  corporation. 
has  a  general  power,  express  or  implied,  to  be  a  party  to 
negotiable  contracts,  such  instruments  ^\dll  be  presumed  to 
have  been  executed  in  the  legitimate  course  of  its  business, 
and  whether  so  executed  or  not  mil  be  valid  in  the  hands 
of  a  bona  fide  holder  "svithout  notice.^^  Unless  the  corpora- 
tion be  specially  authorized  to  do  so,  the  execution  or  in- 
dorsement of  accommodation  paper  for  the  benefit  of  a 
third  person  is  an  act  beyond  the  scope  of  its  corporate  au- 
thority;^'^ but  according  to  the  principles  stated,  a  hona  fde 
holder  taking  without  notice  of  its  character  could  enforce 
it.^^  Its  indorsement  on  the  paper  is  presumably  valid,  and 
it  cannot  be  inferred  in  the  absence  of  proof  that  it  was 

83  Daniel  on  Xegotiable  Instruments,  ■§   382,  and  cases  cited. 
.   84  Curtis  V.  Leavitt,  15  N.  Y.  66. 

85  Supervisors  v.  Schenck,  5  Wall.  784;  Mitchell  v.  Railroad  Co.,  17 
Ga.   574. 

8*!  Field  on  Corporations,  306. 

87  Bird  V.  Daggett,  97  Mass.  494;  National  Bank  v.  Wells,  79  N.  Y. 
498. 


§   146.  COKI'OKATIONS    AS    PAUTIKS.  91 

for  aexL'ommodation."^^  Wlicre  a  railroad  company  transferred 
and  guaranteed  bonds  of  anotlier,  itself  receiving  the  pro- 
ceeds, it  was  held  estopped  to  deny  its  liability  upon  the 
guaranty.^^ 

§  146.  Authority  of  agent  of  corporation. —  It  was  the 
ancient  doctrine  of  the  eoninion  law  that  a  corporation  could 
not  express  its  assent,  and  therefore  could  not  constitute 
an  officer  or  agent,  save  by  instrument  under  seal.^  This 
doctrine  is  now  completely  obsolete  in  the  United  States, 
and  here  there  is  no  doubt  that  such  a  body  may,  by  mere 
vote,  or  other  appropriate  corporate  act  not  under  seal,  ap- 
point an  officer  or  agent  whoso  acts  and  contracts  wdthin 
the  scope  of  his  authority  w'ould  bind  the  corporation."^ 
And  if  a  corporation  employ  a  person  to  discharge  official 
duties  —  such  as  a  bank,  which  places  a  person  behind  its 
counter  to  exercise  the  duties  of  cashier  —  it  will  be  bound 
by  his  acts  although  the  fonnalities  of  qualification  have  not 
been  complied  with,  unless  the  statute  creating  the  corpora- 
tion provides  that  his  acts  shall  be  void  until  such  formali- 
ties be  performed."^  Indeed,  the  doctrine  is  well  settled  that 
if  officers  of  a  cor]3oration  openly  exercise  a  power  which 
])resu])poses  a  delegated  authority  for  the  purpose,  and 
other  corjDorate  acts  show  that  the  corporation  must  have 
contemplated  the  legal  existence  of  such  authority,  the  acts 
of  such  officers  will  be  deemed  rightful,  and  the  delegated 
authority  will  be  presumed.  If  a  person  acts  notoriously  as 
cashier  of  a  bank,  and  is  recognized  by  the  directors,  or  by 
the  corporation,  as  an  existing  officer,  a  regular  appointment 
will  be  presumed,  and  his  acts  as  casliier  will  bind  the  cor- 
poration, although  no  written  proof  is  or  can  be  adduced  of 
his  appointment.  In  short,  the  acts  of  artificial  persons 
afford  the  same  presumptions  as  the  acts  of  natural  persons. 


S8  Lafayette  Bank  v.  St.  Louis  Stoneware  Co.,  2  Mo.  App.  299. 
*9  Arnot  V.  Erie  R.  Co.,  5  Hun,  (iOS. 

00  Aufrell  &  Ames  on  Corporations,  chap.  IX,  §  3.  p.  214. 
91  Bank  of  Columbia  v.  Patterson's  Admr.,   7  Cranch,  305;   Fleckncr 
United  States  Bank.  8  Wheat.  387. 
03  Bank  of  the  United  States  v.  Dandridge,  12  Wheat.  83. 


92  I'ERSONS    QUALIFIED.  §§  l-iT,  14:8, 

Each  affords  prcsiunptions,  from  acts  done,  of  what  must 
have  preceded  them,  as  matters  of  right  or  matters  of  duty."" 

§  147.  Municipal  corporations. — There  is  no  doubt  that 
public  corporations  may  have  the  power  conferred  on  them 
to  execute  bills,  notes,  checks,  and  indeed  all  varieties  of 
negotiable  instruments.  But  the  better  opinion  is,  that  such 
power  does  not  exist,  unless  expressed  or  clearly  implied.''*^ 
The  ordinary  orders,  warrants,  certificates  of  indebtedness, 
and  obligations  to  pay  issued  by  municipal  coi*po rations,  if 
negotiable  in  fonn,  mil  in  general  enable  the  holder  to  sue 
in  his  o-\vn  name.  But  they  are  not  negotiable  instruments 
so  as  to  exclude  inquiry  into  the  legality  of  their  issue,  or 
preclude  defenses  which  are  available  as  against  the  original 
payees.^''  To  invest  such  instruments  with  the  character  and 
incidents  of  conunercial  paper,  so  as  to  render  them  in  the 
hands  of  bona  fide  holders  absolute  obligations  to  pay,  how- 
ever irregularly  or  fraudulently  issued,  would  be  an  ablise  of 
their  true  character  and  purpose.^ 

§  148.  Difference  between  public  and  private  corporations. — 
If  j)rivate  corporations,  to  increase  their  profits,  embark  in 
enterprises  not  authorized  by  their  charter,  still,  as  to  third 
persons,  and  when  necessary  for  the  advancement  of  justice, 
the  stockholders  ^\dll  be  presumed  to  have  assented,  since 
it  is  in  their  power  to  restrain  their  officers,  when  they 
transgress  the  limits  of  their  chartered  authority.^^  But 
municipal  corporations  stand  upon  a  different  ground.  They 
are  not  organized  for  gain,  but  for  the  purpose  of  goveim- 
ment;  and  debts  illegally  contracted  by  their  officers  cannot 

93  Bank  of  the  United  States  v.  Dandridge,  1:2  Wheat.  64;  Creswell 
V.  Lanahan,  101  U.  S.  352. 

94Knapp  V.  Mayor  of  Hoboken,  39  N.  J.  L.  394;  City  of  Williams- 
port  V.  Commonwealth,  84  Pa.  St.  487. 

95  Knapp  V.  Mayor  of  Hoboken,  39  N.  J.  L.  394 ;  1  Dillon  on  Munioi- 
pal  Corjtorations,  §  40(!. 

90  Wall  V.  Monroe  County,  103  U.  S.  74;  District  of  Columbia  v. 
Cornell,  130  U.  S.  661. 

97  Lloyd  V.  West  Branch  Bank,   15  Pa.  St.  174. 


§    140.  COKI'OKATIONS    AS    I'Am'rES.  93 

be  mado  l)inilin^'  u|miii  the  taxpayers  from  tlif  j>rc.-uiiic<l 
assent  of  the  latter.'"^ 

The  principle  is  apitlicalde  to  both  public  and  private  cor- 
porations, as  it  is  to  individuals,  that  where  they  borrow 
money  from  a  bank  or  other  institution,  it  docs  not  lie  in 
their  mouth  to  show  that  the  transaction  was  of  a  character 
prohibited  by  the  charter  of  such  l)ank  or  other  institution."" 

§  149.  Indorsements —  When  a  municipal  corporation  war- 
rant is  deemed  a  commercial  instrument,  negotiable  like 
an  ordinary  bill  of  exchange,  the  party  who  transfers  it  with 
his  indorsement  is  subject  to  the  liabilities  and  entitled  to 
the  privileges  of  an  ordinary  indorser  of  a  negotiable  instru- 
ment.^ But  when,  such  an  instnuuent  is  regarded  as  a  mere 
voucher,  and  not  a  l)ill  or  note,  the  transferrer  by  indorse- 
ment is  not  deemed  an  "  indorser,"  in  the  commercial  sense 
of  the  term,  and  could  not  be  held  liable  as  such,  though 
the  form  of  the  jiajjor  ])e  negotiable.  He  would  be  liable, 
however,  to  refund  the  consideration  if  the  instnmient  were 
not   valid  and  legal  according  to   its  purport." 

f'S  Bradley  v.  Ballard,  55  111.   420. 

09  Township  of  Pine  Grove  v.  Talcott,  19  Wall.  GIO;  Daniel  on  Nego- 
tiable Instruments,   §  423. 

1  Bull  V.  Sims,  23  N.  Y.  571. 

2  Keller  v.  Hicks,  22  Cal.  4G0;  Daniel  on  Negotiable  Instruments, 
§  427. 


CHAPTER  yil. 

PERSONS  PARTIALLY  OR  WHOLLY  DISOUALIFIED. 


SECTTOK  I. 

INFANTS, 

§  150.  General  rule. — Persons  iindei*  twenty-one  years  of 
age  are  minors,  or  infants,  as  they  are  more  generally  termed, 
and  contracts  made  by  them  have  been  divided  into  three 
classes:  First,  void  contracts,  Avhich  are  those  clearly  to 
the  infant's  disadvantage  —  as,  for  instance,  a  bond  made 
with  a  penalty;  second,  voidable  contracts,  which  are  those 
which  may  or  may  not  be  for  his  benefit,  according  to  cir- 
cumstances —  as,  for  example,  a  lease  of  his  lands  render- 
ing rent;  and  third,  valid  contracts,  which  are  such  as  are 
entered  into  for  necessaries.^  And  by  necessaries  are  meant 
those  things  which  are  needed  by  the  infant,  and  are  suited 
to  his  means  and  rank  in  life. 

But  this  distinction  as  to  void  and  voidable  contracts  is 
now  regarded  as  practically  obsolete;  all  the  contracts  of  an 
infant,  not  in  themselves  illegal,  being  capable  of  ratification 
by  him  after  he  has  attained  his  majority,  and,  therefore, 
being  voidable  only.  For  if  absolutely  void,  they  would  be 
incapable  of  ratification.^ 

§  151.  Necessaries  and  torts —  For  necessaries  an  infant 
may  undoubtedly  bind  himself,  and  the  better  opinion  is 
that  he  may  execute  a  note  not  negotiable  for  the  amount, 
the  consideration  of  which  might  be  inquired  into,  and  his 
protection  from  imposition  insured  —  he  being  bound  not 
absolutely  for  the  amount  of  the  note,  but  only  for  the  real 
value  of  the  necessaries  for  which  it  was  given.^     But  it  is 

1  Story  on  Notes,   §   77. 

2  1  Parsons  on  Contracts,  29,'5;  Byles  on  Bills  [*r)0],  145;  Daniel  on 
Nef^otiable  Instruments,  §  22.3. 

3  Ray  V.  Tubbs,  50  Vt.  688;   1  Parsons  on  Notes  and  Bills,  G8. 

[94J 


§  152.  l.XKANTS.  95 

denied  by  some  of  tlic  authorities  that  an  infant  can  exe- 
cute any  note  whatever,  of  any  binding-  force,  oven  for  neces- 
saries,^ In  Enghind  it  has  been  hehl  that  an  infant  may 
execute  a  single  bill  (a  bond  without  a  penalty)  for  the 
exact  sum  due  for  necessaries;  but  not  a  bond  with  a  pen- 
alty, or  carrying  interest.''  An  infant  cannot  bind  himself 
for  necessaries  when  he  has  a  parent  or  guardian  who  sup- 
plies his  wants;"  but  when  he  has  authority  from  his  guard- 
ian or  parent,  he  may  purchase  them  and  bind  himself  for 
them/  An  infant  is  in  general  liable  for  his  torts  as  any 
other  person  would  be;  and  if  he  give  a  note  in  satisfac- 
tion of  damagos  it  lifts  lioon  hold  that  he  is  bound  thereby.* 

§  152.  Negotiable  paper  signed  by  infants. —  In  respect  to 
negotiable  paper  to  which  infants  have  signed  their  names 
as  parties,  it  may  be  stated  as  a  general  principle,  univer- 
sally recogiiized  wherever  the  common  law  prevails,  that 
an  infant  cannot  bind  himself  absolutely  as  drawer,  indorser, 
acceptor,  or  maker  of  a  bill  of  exchan^<^  or  negotiable  note.^ 
In  a  case  where  the  acceptor  of  a  bill  pleaded  infancy,  and 
it  was  replied  that  it  was  given  for  necessaries,  Lord  Mans- 
field, C.  J.,  said:  "  Did  anyone  ever  hear  of  an  infant  being* 
liable  as  an  acceptor  of  a  bill  of  exchange?  The  replica- 
tion is  nonsense,  and  ought  to  have  been  demurred  to."  ^^ 
And  although  the  tenor  of  the  modern  authorities  is  to 
liberalize  the  law  on  the  subject  of  infancy,  the  doctrine  is 
generally  followed  that  an  infant  cannot  be  a  party  to  a 
negotiable  instrument  —  the  reason  assignexl  being,  that 
otherwise,  should  it  be  transferred  to  a  ho7ia  fide  holder  for 
value,  and  without  notice  of  the  infancy,  the  infant,  if  bound 
at  all,  would  be  bound  for  the  entire  sum,  and  if  inquiry 


4Bouchell  V.  Clarj',  3  Brev.  194;  Chitty  on  Bills  ["lO],  26. 
5  Russell  V.  Lee,  1  Lev.  80;  Chitty  on  Bills  [*1!)].  2(). 
« Angel  V.  McClellan,  Ifi  Mass.  28;  Guthrie  v.  Murphy.  4  Watts,  80. 
TRundel  v.  Keeler,  7  Watts,  237:  Watson  v.  Heasel.  7  Watts.  344. 
8  Ray  V.  Tubbs,  .')0  Vt.  088;  Daniel  on  Negotiable  Instruments,  §  224. 
» Williamson  v.   Harrison.   Holt,   359,   3  Salk.   197;    Story  on  Notes, 
§   78. 

10  Williamson  v.  Watts,   1   Campb.  552. 


96  PERSONS    DlSQUALiriEl).  §§  153,  154. 

Avere  admitted  into  the  consideration,  the  instrument  would 
lose  its  character  as  negotiable  paper.^^ 

§  153.  Infant  as  payee  and  indorser. —  An  infant  may  un- 
doubtedly be  the  payee  of  a  bill  or  note,  and  may  sue  upon 
and  enforce  it,  since  it  cannot  be  but  for  his  benefit  if  the 
consideration  thereof  does  not  move  from  himself  but  from 
some  third  person,  or  if  it  be  for  a  debt  justly  due  to  him.^^ 
But  -whether  or  not  an  infant  can  personally  receive  pay- 
ment is  a  different  question.  As  a  general  rule,  payment 
should  be  made  to  his  guardian,  and  if  it  be  made  to  the 
infant  personally,  and  be  thereby  dissipated  and  lost,  the 
payer  Avould  not  be  discharged.^^  An  infant  may  also  in- 
dorse a  bill  or  note  made  payable  to  him  or  order,  so  far  at 
least  as  to  enable  the  indorsee  to  recover  against  the  drawer, 
acceptor,  or  maker,  who,  by  undertaking  to  pay  to  him  or 
to  his  order,  are  estopped  to  deny  his  capacity  to  order 
payment  to  be  made  to  the  indorsee.^'*  And  to  this  extent 
the  infant's  indorsement  Avould  be  valid,  even  if  made  by 
his  authorized  agent  or  attomey.^^  "  It  would  be  absurd," 
it  has  been  said  by  Parker,  C,  J.,  "  to  allow  one  who  has 
made  a  promise  to  pay  to  one  Avho  is  an  infant,  or  his  order, 
to  refuse  to  pay  the  money  to  one  to  whom  the  infant  had 
ordered  it  to  be  paid,  in  direct  violation  of  his  promise."  ^^ 
And  in  respect  to  the  drawer  of  a  bill  payable  to  an  infant 
or  order.  Lord  Mansfield  said :  "  The  drawer  says,  '  let  any- 
body trust  the  payee  on  my  credit.'  "  ^^ 

§  154.  Infant's  indorsement  voidable  only. —  An  infant's 
indorsement  is  voidable,  not  absolutely  void.^^     And  it  has 

11  Swasey  v.  Vanderheyden,  10  Johns.  33;  Conn  v.  Coburn,  7  N.  H. 
368. 

12  Warwick  v.  Bruce,  2  Maule  &  S.  205 ;  Story  on  Notes,  §  79. 

13  Phillips  V.  Paget,  2  Ark.  80. 

14  Nightingale  v.  Withington,  15  Mass.  272;  Hardy  v.  Waters,  38 
Me.   4.50. 

15  Hardy  v.  Waters,  38  Me.  4.50. 

16  Nightingale  v.  Withington,  15  Mass.  272. 

17  Grey  v.  Cooper,  3  Doug.  05 ;  Daniel  on  Negotiable  Instruments, 
%  227. 

ISGoodsell  V.  Mvers,  3  Wend.  479;   Edwards  on  Bills,  245. 


§  155.  INFANTS.  97 

been  thoiiglit  that  where  ho  receives  a  full  consideration  for 
the  transfer  of  property,  sucli  as  a  negotiable  bill  or  note, 
and  makes  a  manual  delivery  of  it,  his  right  to  rescind  or 
avoid  the  contract  is  suspended  until  he  becomes  of  age.^° 
And  then  ho  is  not  allowed  to  disaffirm  the  contract  unless 
he  returns  the  consideration  paid  to  him.-'^  We  should  say 
that  he  might  disaffirm  the  contract  and  retuni  the  con- 
sideration at  any  time,  provided  it  was  not  unreasonably 
delayed  after  he  became  of  age.^^ 

§  155.  Ratification  by  adult  of  bills  and  notes  executed  when 
an  infant. —  The  bill  of  exchange  or  promissory  note  of  an 
infant  is  not  absolutely  void,  but  voidable  only  at  his  elec- 
tion. And  if,  after  reaching  full  age,  the  then  adult  ratify 
iind  confirm  his  bill  or  note  executed  while  ho  was  an  infant, 
whether  it  were  framed  so  as  to  be  negotiable  or  not,  he 
will  be  bound  to  pay  the  instrument  according  to  its  terms. 
For  by  ratification  the  adult  validates  the  instrument  in  all 
respects,  and  it  becomes  the  same  as  if  it  had  been  exe- 
cuted by  an  adult.^^  The  effect  of  the  ratification,  as  stated 
by  Shaw,  0.  J.,  is  "  to  ratify  and  confinn  the  contract,  and 
give  it  the  same  legal  effect  as  if  the  promisor  had  been  of 
legal  capacity  to  make  the  note  when  it  was  made."  ^  And 
consequently  the  bill  or  note  may  be  sued  upon,  without 
any  allegation  of  ratification  —  that  being  necessary  to  ap- 
pear only  in  rebuttal  of  the  plea  of  infancy,  when  pleaded.-"* 

Unless  a  written  ratification  be  required  by  statute,  a 
verbal  ratification  will  be  effectual.  As  to  what  w^ords  vdW 
amount  to  a  ratification,  a  mere  recognition  that  the  debt 
existed,  or  contract  was  made,  is  not  sufiicient.^  No  pe- 
culiar form  of  words  is  requisite,  but  there  must  be  a  direct 

JO  Roof  V.  Stafford.  7  Cow.   179,  9  Cow.  626. 
2rtMedbury  v.  Watrous.  7  Hill,   110. 

21  Bool  V.  Mix,  17  Wend.   119. 

22  Cole  V.  Pennell,  2  Rand.  174:  Williania  v.  Moore,  11  M.  &  W.  266; 
Hunt  V.  Massey,  5  B.  &  Ad.  902. 

23  Reed  V.  Batchelder,  1  Mete.    (Mass.)   559. 

24  Daniel  on  Negotiable  Instruments,  §  230,  and  notes. 

25  Martin  v.  Mayo.  10  Mass.  137;  Bobbins  v.  Eaton,  10  N.  H.  561; 
Be-nham  v.  Bishop.   9  Conn.  330. 

r 


98  I'EKSO.XS    DISQUALIFIED.  §§  156,  1,57. 

and  explicit  recognition  of  the  contract,  and  words  express- 
ing or  necessarily  implying  a  promise  to  fulfill  it.  The 
promise  of  the  adult  must  be  made  to  the  party  with  whom 
he  contracted,  or  his  authorized  agent,  in  order  to  amount 
to  ratification;  and  if  made  to  a  third  party,  it  will  be  in- 
sufficient.^ 

It  follows,  therefore,  that  mere  part  payment  docs  not 
amount  to  ratification  by  the  adult,  but  expressions  of  in- 
tention to  abide  by  a  former  award,  or  accepting  its  benefits, 
would  suffice.  Hence  the  infant's  conduct  may  be  such  as 
to  amount  to  ratification,  but  mere  silence  and  failure  to 
disaffinn  will  not  be  sufficient  alone.^^ 

§  156.  Written  ratification. —  In  England  and  some  of  the 
United  States,  ratification  must  be  in  writing.  In  18 28, 
Parliament  enacted  the  statute  of  9  George  IV,  chap.  14, 
commonly  called  Lord  Tenterden's  act,  whereby  it  is  pro- 
vided that  "  no  action  shall  be  maintained  whereby  to  charge 
any  person,  upon  any  promise  made  after  full  age,  to  pay 
any  debt  contracted  during  infancy,  or  upon  any  ratifica- 
tion after  full  age,  of  any  promise  or  simple  contract  made 
during  infancy,  unless  such  promise  or  ratification  shall  be 
made  by  some  writing  signed  by  the  party  to  be  charged 
therewith."  And  similar  statutes  have  been  enacted  in  most 
of  the  United  States. 

Wherever  such  a  statute  f^xists,  a  written  promise,  in  ac- 
cordance with  the  enactment,  is  essential  to  a  legal  ratifi- 
cation. 

SECTIO]:^  II. 

LUNATICS,    IMBECILES,    AND   DEUNKAEDS. 

§  157.  Presumption  of  sanity — Every  person  is  presumed 
to  be  of  sane  mind  until  the  contrary  be  shoA\ai  by  him  who 
asserts  it;^  insanity  or  imbecility  cannot  in  England  be 
shown  under  a  general  plea  that  the  defendant  did  not  exe- 

26Goodsell  V.  Myers,  3  Wond.  479;  Reed  v.  Boshears,  4  Sneed,  118. 

27  Daniel  on  Negotiable  Instruments,   §  234. 

28  Jackson  v.  Van  Dusen,  5  Johns.  144;  1  Parsons  on  Notes  and  Bills, 
150. 


§§  158-lGO.        LUNATICS,     IMIJIXILES,     AND     DKLN  KAUDS.  It!) 

cuto   the   bill,    note,    or   other   instruiuont   <leclarc(l    on,    Imt 
must  be  specially  })leiided.*" 

The  earlier  authorities  of  the  English  law  held  that  a 
man  should  not  be  allowed  to  stultify  himself  by  alleging 
liis  own  lunaey  or  imbecility;^"  but  such  a  doctrine  sounds 
more  like  the  gibberish  of  a  lunatic  than  like  the  decree  of 
a  humane  and  enlightened  lawgiver.  And  it  may  now  be  re- 
garded as  a  general  rule  of  universal  law  that  the  negotiable 
contracts  of  a  lunatic,  idiot,  or  other  person  non  compos 
77icnfis,  from  age  or  personal  infinnity,  are  utterly  void.'"' 

ij  158.  Degree  of  incapacity. —  Mere  weakness  of  mind,  not 
amounting  to  imbecility  or  insanity  —  mere  innnaturity  of 
reason,  or  want  of  experience  and  skill  in  business,  is  no 
ground  of  defense  either  in  laAV  or  equity,  provided  no  fraud 
has  been  practiced  on  the  party.^"  But  if  the  weakness  of 
mind  bo  so  great  as  to  incapacitate  the  party  to  guard 
against  imposition  and  undue  influence,  it  will  suffice  to  va- 
cate his  contracts.^' 

§  159,  Ignorance  of  incapacity. —  It  has  been  held  by  quite 
a  nund)er  of  courts  that  in  order  to  render  effectual  the 
defense  of  insanity  or  imbecility,  it  must  be  made  to  appear 
that  the  other  contracting  ])arty  had  knowledge  of  the  de- 
fect of  mind  of  the  lunatic  or  idiot,  and  this  view  has  been 
upheld  not  only  by  many  of  the  courts  of  last  resort  in  the 
United  States,  but  also  in  England.  But  neither  the  English 
nor  the  American  courts  are  in  harmony  upon  the  proposi- 
tion, there  being  many  well-considered  cases  which  sup- 
port  the  contrary  view.^"* 

§160.  Necessaries;  exception  to  rule. —  In  this  regard  an 
imbecile  stands   ii])on   the  footing  of  an   infant.      And   his 

29  Harrison  v.  Richardson,   1  Moody  &  R.   504. 

"0  Beverly's  Case,  4   Rep.   126;   Stroud  v.  Marshall.   Cro.  Eliz.  .398. 
•">i  Daniel   on  Xegotiable  Instruments,   §   •209;    Dickerson  v.   Davi-.   19 
N.  E.   145. 

32  Stewart  v.  Lispenard,  2{>  Wend.  2'.)!);  Osmond  v.  Fitzroy.  .3  P.  Wms. 
129. 

33  Johnson  v.   Chadwell,  8  Ilumphr.    145. 

"i  Daniel  on  Xcgotiable  Instruments.  §  210,  and  cases  cited. 


100  I'HK.SOAS    i)l:vQUALll-lJ£D.  §   101. 

executed  contracts  for  necessaries,  made  while  he  was  tem- 
porarily or  apparently  sane,  with  a  party  acting  in  entire 
good  faith,  would  be  enforced.^^  Aiid  if  a  bill  or  note  were 
executed  by  him  for  necessaries  under  such  circumstances, 
it  would  doubtless  be  valid,  at  least  to  the  extent  of  their 
actual  and  proven  value.^"  A  lunatic  has  been  held  bound 
for  medical  sen'ices  rendered  his  wife;^^  and  in  England, 
where  a  nobleman  ordered  carriages  suitable  to  his  rank, 
and  the  coachmaker  supplied  them  bona  fide,  and  they  were 
actually  used,  it  was  held  that  an  action  was  maintainable 
on  the  contract,  notwithstanding  there  had  been  an  inquisi- 
tion (^f  lunacy  finding  him  to  be  of  unsound  mind  at  the 
time  the  carriages  w^ere  ordered.^^  The  recovery  for  neces- 
saries, instead  of  being  condemned,  is  encouraged  by  con- 
siderations of  humanity.  And  the  courts  may  safely  go 
farther,  and  authorize  recovery  where  the  consideration  has 
been  full  and  fair,  and  has  entered  into  the  betterment  of 
the  lunatic's  estate,  it  being  followed  like  trust  money  into 
his  hands,  and  restored  in  kind  or  its  equivalent.^^ 

§  161.  Persons  intoxicated. —  Drunkenness  is  a  species  of 
mental  aberration,  j)roduced  by  intoxicating  stimulants. 
And  if  a  person  become  so  diimk  as  to  be  deprived  of  under- 
standing and  reason,  there  is  no  doubt  that,  while  in  such 
a  condition,  he  has  no  capacity  to  enter  into  a  contract. 
And  if  he  should  sign  a  negotiable  instrument,  either  as 
maker,  drawer,  indorser,  or  acceptor,  it  would  certainly  be 
void  as  to  all  parties  having  notice  of  the  condition  in  which 
he  signied  it.^"  If  the  drunkenness  Avere  so  complete  as  to 
suspend  all  rational  thought,  the  better  opinion  is  that  any 
instrument  signed  by  the  party  would  be  utterly  void  even  in 
the  hands  of  a  hona  fide  holder  without  notice,  foi*,  although 
it  may  have  been  the  party's  own  fault  that  such  an  aberra- 

•i-' Rirhardson  v.  Strong,  1.3  Ired.  106;  McCuUis  v.  Bartlett,  8  N.  H. 
569. 

soMoConnick  v.  Littler,  85  111.  62. 

37  Pearl  v.  McDowell,  3  J.  J.  Marsh.  658. 

38  Baxter  v.  Earl  of  Portsmouth,  7  Dowl.  &  R.  614. 
S8  Daniel  on  Negotiable  Instruments,  §  212. 

40  Jenners  v.  Howard,  6  Blackf.  240;  Clark  v.  Caldwell.  6  Watts,  139. 


g^   H'r2,  1(>3.  AMKN     K.N  KM  IKS.  101 

tiou  of  luincl  was  iirotluccil,  when  iinxliiccd,  it  suspended 
for  the  time  hviw^  iiis  capacity  to  consent,  which  is  the  tirst 
essential  of  a  contract.''^  "It  is  jnst  the  same,"  says  AMer- 
son,  B.,  ''  as  if  the  defendant  had  written  his  name  on  the 
bill  in  his  sleep  in  a  state  of  sonnianihulism."  *^  But  it  has 
been  thought  and  held,  that  even  when  the  drunkenness  was 
complete,  a  bill  or  note  then  signed  would  be  valid  in  the 
liands  of  a  bona  fide  holder  -w-ithout  notice. ■*'  If  the  party 
were  fully  aware  of  what  he  was  doing  when  he  signed  the 
paper  it  would  clearly  be  binding,  as  we  think,  in  the  hands 
of  a  bona  fide  holder. ■*"*  Clearly,  ''  the  merriment  of  a 
cheerful  cup,  which  rather  revives  the  spirits  than,  stupefies 
the  reason,  is  no  hindrance  to  the  contracting  of  just  obliga- 
tions." '^ 

^  162.  Ratification. —  The  same  general  principles  of  the 
law  of  ratitication  applicable  to  infancy  govern  in  cases 
of  lunacy,  and  hence  a  lunatic,  either  during  a  distinct  lucid 
interval,  or  after  pennanent  recovery,  can  ratify  a  contract 
entered  into  while  the  mind  was  in  a  state  of  disease.  In 
case  of  drunkenness,  the  law  does  not  require  an  affirmative 
act  or  a  positive  promise  in  order  to  constitute  ratification. 
If  a  party,  therefore,  while  intoxicated,  buy  goods,  and  keep 
them  when  sober,  the  failure  on  his  part  to  return,  the  goods 
is  tantamount  to  ratification,  upon  the  principle  of  estoppel.*'^ 

SECTION  III. 

ALIEN    ENEMIES. 

§  163.  General  principles. —  The  mere  fact  that  a  person  is 
an  alien  and  a  resident  of  a  foreign  country  in  nomse  im- 
pairs the  right  of  the  citizents  of  another  country  to  con- 
tract with  him,  or  his  right  to  contract  ^rith  them.     On  tlie 

41  1  Parsons  on  Notes  and  Bills,  151. 

42  Gore  V.  Gibson,  13  M.  &  W.  G23. 
estate  Bank  v.  McCoy,  69  Pa.  St.  204. 
44  Miller  v.  Finley,  26  Mich.  240. 
45Puffendorf,   Book  3,  chap.   6,   §   4. 

•«j  Daniel  on  Negotiable  Instruments,  §  215. 


102  l'EKS03;.S    DISI^UALIKIEU.  §  104. 

coutrary,  commercial  intercourse  between  different  nations, 
mider  relations  of  amity  with  each  other,  are  to  be  favored 
and  encouraged.  But  if  war  should  break  out  between  two 
countries,  it  at  once  interposes  a  barrier  to,  and  an  inter- 
diction of,  all  conmiercial  correspondence,  intercourse,  and 
dealing  between  the  citizens  of  the  two  countries.  The  hos- 
tile couutnes  become  sealed  as  against  each  other;  and  both 
for  the  purpose  of  identifying  the  citizen  thoroughly  and 
emphatically  with  the  policy  and  interests  of  his  country, 
and  of  preventing  coimnunications  to  the  enemy  which 
might  be  damaging  in  their  character,  the  law  of  nations 
absolutely  prohibits  all  intercourse  between  the  citizens  of 
belligerent  countries,  and  pronounces  all  contracts  between 
them  utterly  void.  Such  contracts  are  not  merely  voidable, 
but  ah  origine  void,  and  incapable  of  being  enforced  or  con- 
firmed.'*'^ And  the  rule  applies  not  only  to  citizens  and  native 
subjects,  but  as  well  to  all  persons  domiciled  in  the  respective 
countries.^^ 

This  disability  of  alien  enemies  to  contract  does  not  rest 
upon  any  peculiarity  of  English  or  American  law,  but  upon 
the  imiversal  public  law  of  nations,  as  stated  and  approved 
by  the  most  eminent  writers,  such  as  Grotius,  Puffendorf, 
Vattel,  Bynkershoek;  and  in  the  present  age,  Wheaton, 
>Stoi*y,  Kent,  Parsons,  and  others. 

§  164.  As  drawer,  acceptor,  indorser,  or  indorsee. —  If  two 
countries  are  at  war,  a  citizen  of  one  cannot  legally  draw  a 
bill  of  exchange  upon  a  citizen  of  the  other.  The  same 
principle  likemse  applies  to  an  acceptance  or  indorsement, 
and  even  to  an  indorsee,  if  the  latter  knew  at  the  time  of 
the  state  of  war  existing.  ^^ 

In  the  late  war  between  the  Confederate  States  and  the 
United  States,  many  transactions  between  parties  on  oppo- 
site sides  of  the  hostile  line  occurred,  and  the  principle  that 
forbids  communication  between  alien  enemies  has  been  re- 
garded by   the  courts   of   the   United   States,   and  of   the 

47Griswold  v.  Waddingtoti,  16  Johns.  438:  The  Julia,  8  Cranch,  131. 

48  Roberts  v.  Hardy,  3  Maule  &  S.  .533. 

49  Daniel  on  Negotiable  Instruments,  §§  217,  218. 


§§165,100.  iL.Mn;ii:i)  woMKX.  103 

several  States,  as  applicable  to  tlieui.  For  while  tlio  Con- 
federates States  were  short-lived,  for  the  time  being-  they 
waged  war  like  an  independent  nation,  and  were  accorded 
belligerent  rights.^" 

SECTION  IV. 

MARRIED  WOMEN. 

g  165.  Incapacity  of  married  woman  to  contract  at  common 
law.—  Wherever  the  eonunon  law  prevails  a  married  woman 
cannot  bind  herself  as  the  drawer,  acceptor,  maker,  or  in- 
dorser  of  ii  negotiable  instrument,  and  such  instruments 
signed  by  her  (unless  as  agent  for  another)  are  absolutely 
void.^^  And  even  a  promise  made  by  her  after  her  hus- 
band's death  to  pay  a  bill  or  note  which  she  executed  during 
his  lifetime  \d\\  not  bind  her  unless  upon  a  new  and  good 
consideration.^^ 

Following  the  principle  just  announced,  it  may  be  added 
that  the  wife's  identity  is  so  completely  merged  in  the  hus- 
band's that  she  can  no  more  contract  with  him  than  A\-ith  a 
stranger.^^  Therefore  the  drawing  or  indorsement  of  a  bill 
or  note  by  a  husband  to  his  wife  is  void,  and  she  cannot 
sue  upon  it  either  in  his  lifetime,  or  against  his  executor 
after  his  decease. "^^ 

§  166.  Married  woman  as  payee  and  indorser. —  If  a  bill  or 
note  be  made  payable  to  a  single  woman,  and  she  afterAvard 
marries,  it  becomes  the  property  of  her  husband;  and  if 
made  to  her  after  man-iage,  it  is  the  property  of  her  hus- 
band. For  two  reasons,  therefore,  a  married  woman,  who 
is  the  payee  of  a  negotiable  instrument,  cannot  transfer  a 
perfect  legal  title  to  it,  or  bind  herself  by  indorsing  it;  first, 
because  she  has  no  capacity  to  contract;  and,  second,  be- 
so  Billgerry  V.   BiiUicli.   10   r.ratt.  39.3;   \Yard  v.   Smith,  7  Wall.  447. 

51  Van  Stccnbur-,'h  v.  Hoffman,  1.5  l?aib.  28;  Mason  v.  :\Iorgan,  2  Ad. 
&  El.  30. 

52  Lloyd  V.  Lee,  1  Stra.  94;  :Meyer  v.  HayAvorth,  S  Ad.  &  El.  467. 
5:?  National  Bank  v.  Brewster,  49  X.  J.  L.  231. 

54  Gay  V.  Kingsley,  11  Allen.  345:  Jackson  v.  Parks,  10  Cush.  550. 


104  TEESOXS    DiSliUAT.lFIED.  §  lOT. 

cause  the  instnmient  is  her  hiisband's.^^  But  still,  although 
the  husbaud  might  recover  the  instrument  which  has  been 
transferred  by  liis  "svife,  in  an  action  of  trover  against  the 
holder,  the  drawer,  and  acceptor  of  a  bill  and  the  maker  of 
a  note,  who  have  bound  themselves  to  pay  to  the  payee  or 
order,  are  estopped,  when  that  order  is  made,  to  deny  its 
PuiHciency.  It  does  not  lie  in  their  mouths  to  declare  the 
effect  of  their  own  engagement  to  be  different  from  its 
terms;  and  the  holder,  under  the  indorsement  of  a  payee, 
who  is  a  married  woman,  may  recover  against  them.^''  And 
if  there  be  an  indorser,  after  the  married  Avoman,  he  cannot 
dispute  her  capacity,  as  his  indorsement  warrants  it.^^  But 
other  parties  to  the  instrument,  not  being  estopped  by  their 
relation  to  it,  may  show  that  one  —  not  the  payee  —  who 
has  indorsed  it,  is  a  married  woman.  These  views  clearly 
apply  where  the  paper  has  been  executed  to  the  woman  after 
her  marriage;  but  if  made  to  her  before,  disability  subse- 
quently created  might  be  pleaded  by  any  party.^* 

§  167.  Exceptions  to  the  general  rule. —  There  are  six  gen- 
eral exceptions  to  the  rule  that  a  married  woman  cannot 
make  a  valid  contract:  (1)  When  the  husband  is  an  alien 
enemy;  (2)  when  the  wife  has  a  separate  estate,  and  the 
contract  is  made  with  reference  to  or  for  the  benefit  of 
such  estate;  (3)  when  the  wife  is  a  sole  trader;  (4)  when 
the  contract  is  made  for  the  wife's  necessaries;  (5)  when 
the  husband  adopts  the  wife's  name;  (6)  when  the  wife  is 
the  agent  of  her  husband.^^ 

In  either  of  the  instances  given,  the  wife  can  become  a 
party  to  a  negotiable  contract,  and  be  bound  as  such. 

The  contractual  power  of  married  women  has  been  made 
the  subject  of  legislation  in  very  many,  if  not  in  all  the 
States.     The  general  scope  of  this  remedial  legislation  is 

55  Shuttleworth  v.  Noyes,  8  Mass.  229;  Cotes  v.  Davis,  1  Campb.  485. 
50  Smith  V.  Marsack,  6  Com.  B.  486. 
STPrescott  Bank  v.  Caveily,  7  Gray,  217. 

58  Smith  V.  Marsack,  6  Com.  B.  48G;  DaTiiel  on  Negotiable  Instru- 
ments, §  242. 

5S  Daniel  on  Negotiable  Instruments,   §   244   et  seq. 


§  1G7.  .MAi;i;ii:i»   women.  105 

either  to  give  to  lier  unlimited  contractual  power,  or  to 
make  valid  and  legal  all  contracts  made  by  her  with  refer- 
ence to  or  for  the  benetit  of  her  separate  estate.  The  de- 
cisions by  the  different  State  courts  are  as  varied  as  is  the 
language  of  the  different  enactments,  but  it  may  be  fairly 
and  generally  stated  that  to  the  extent  of  her  contractual 
power,  whether  it  be  limited  or  unlimited  by  statute,  she 
may  become  a  party  to  a  negotiable  instrument. 


BOOK  III. 

THE  NEGOTIATION  OF  THE   INSTRUMENT. 


CHAPTER  Till. 

TRANSFER  BY  DELIVERY  AND  INDORSEMENT.    . 

§  168.  Methods  of  transfer. —  The  legal  title  to  all  nego- 
tiable coutracts  is  transferred  either  by  mere  delivery,  or 
by  indorsement  and  delivery.  A  negotiable  instrument  pay- 
able to  bearer,  or  indorsed  in  blank,  may  be  transferred  like 
currency  by  mere  delivery;  other  bills  and  notes,  by  indorse- 
ment of  the  transferrer's  name  thereon,  and  delivery  to  the 
individual  named,  unless  they  are  not  expressed  to  be  pay- 
able to  the  order  of  any  person,  or  to  bearer,  in  which  case, 
unless  by  statute,  they  are  not  negotiable  in  the  United 
States  and  in  England;  but  it  is  otherwise  in  Scotland.  But 
if  the  paper  be  payable  to  A.  B,,  or  order,  and  A.  B.  in- 
dorse it  to  C.  D.,  without  adding  "  or  order,"  C.  D.  may, 
nevertheless,  transfer  it  by  indorsement  and  delivery,  and  it 
retains  its  original  negotiable  character.-^ 

While  commercial  paper  payable  to  bearer,  or  indorsed 
in  blank,  may  be  transferred  by  delivery  merely,  yet  if  the 
payee  puts  his  name  upon  it,  and  transfers  it,  he  is  liable 
as  an  indorser,  such  indorsement  being  valid  between  the 
indorser  and  subsequent  indorsees;^  and  the  holder  of  paper 
payable  to  bearer  and  indorsed  may  sue  upon  it  as  bearer 
or  indorsee,  at  his  election.^  When  the  instrument  is  made 
payable  to  "  order,"  the  indorsement  of  the  payee,  followed 
by  delivery,  is  necessary  to  transfer  the  legal  title;  and 
the  transferee,  without  indorsement,  takes  it  as  a  mere  chose 

1  Potter  V.  Tyler,  2  Mete.    (Ky.)    58;   Blackman  v.  Green,  24  Vt.   17. 

2  Gwinnell  v.  Herbert,  5  Ad.  &  EI.  436 ;  Brush  v.  Eeeves,  3  Johns.  439. 

3  Story  on  Notes,  §  132. 

[106] 


§g   IGO,   ITO.  .NATLUK    OF    INDOKSK.ME.NT.  107 

in  action,  and  must  aver  aii<l  prove  the  consideraticHi."*  And 
he  takes  it  subject  to  all  ec^uities  that  attached  to  it  in  the 
hands  of  his  transferrer-^  The  negotiability  of  a  note  is 
not  affected  by  the  fact  that  a  corporation  indorses  it  through 
its  seal.** 

§  169.  Delivery  by  indorser —  As  has  been  seen,  delivery, 
in  any  event,  by  the  indorser  is  essential  to  completion  of 
his  contract;  and  delivery  implies  its  acceptance  by  the  in- 
dorsee. If  a  transferee  of  a  bill  or  note  by  indorsement 
send  it  back  to  his  indorser  as  worthless,  the  indorsement 
is  declined,  and  becomes  invalid;  and  he  acquires  no  new 
title  by  merely  getting  possession,  without  a  new  transfer; 
but  there  need  not  be  a  new  indorsement,  because  the  former 
indorsement  is  capable  of  becoming  again  valid  by  ratifica- 
tion or  confinnation.'  An  offer  to  indorse  for  another  must 
be  accepted  in  a  reasonable  time.'^  If  the  proposed  indorsee 
wrongfully  retain  the  note -after  refusing  its  acceptance,  he 
cannot  upon  payment  of  a  judgment  for  the  wrongful  con- 
version hold  the  indorser  liable;  such  payment  will  invest 
him  with  title  to  the  converted  property  as  of  the  date  of 
the  conversion,  which  is  merely  the  obligation  of  the  makers 
of  the  note,  the  contract  of  indorsement  having  never  been 
consummated.^ 

SECTION  I. 

NATURE    OF,  AXD   LIABILITIES   CREATED  BY,   CONTRACT   OF   IN- 
DORSEMENT. 

§  170.  Meaning  of  term  "  indorsement." —  Indorsina-  an  in- 
strument,  in  its  literal  sense  means  writing  one's  name  on 
the  back  thereof;  and,  in  its  technical  sense,  it  means  writ- 
ing one's  name  thereon  with  intent  to  pass  title  thereto  and 
to  incur  the  liability  of  a  party  who  warrants  payment  of  the 

•tVan  Eman  v.  Stanchfiold.  10  ^finn.  2r).> ;  Faris  v.  Wells,  68  Ga.  004. 
SHadden  v.  Eodkey,  17  Kan.  429. 

ORand  V.  Dovoy,  83  Pa.  St.  280:  Daniel  on  Negotiable  Instruments, 
§  663  ct  srq. 

TCartwright  v.  Williams,  2   Stark.   340. 
sCIaflin  V.  Briant,  58  Ga.  414. 
OHaas  V.  Sacket,  40  Minn.  53. 


108  TRA^•SFEK    i;V    BELIVKKY    AXD    lA' UOKSE:\rENT.       §  171  ^ 

iiistruiuent,  provided  it  is  duly  presented  to  the  principal  at 
maturity,  not  paid  by  him,  and  such  fact  is  duly  notilied  to 
the  indorser.  Indorsement,  strictly  speaking,  is  applicable 
only  to  negotiable  paper,  and  the  term  includes  delivery  for 
value  to  the  indorsee,  Init  it  is  otherwise  as  to  an  instrument 
not  negotiable. ^*^ 

§  171.  An  indorsement  a  separate  and  independent  contract. 
—  The  indorsement  of  a  negotiable  contract  is  not  merely 
a  transfer  thereof,  but  it  is  a  fresh  and  substantive  contract 
in  itself,  embod^'ing  all  the  terms  of  the  instrument  in- 
dorsed.^^  The  indorsement  of  a  bill  is  equivalent  to  the 
drawing  of  a  new  bill  by  the  drawer  upon  the  drawee  (or 
acceptor,  if  it  be  accepted)  in  favor  of  the  indorsee ;  and  the 
indorsement  of  a  note  is  equivalent  to  the  drawing  of  a  bill 
upon  the  maker,  who  stands  in  the  relation  of  acceptor,  as 
it  were,  in  favor  of  the  indorsee.-^^  So  entirely  distinct  and 
independent  is  the  contract  of  the  indorser  of  a  note  from 
that  of  the  maker  that  at  common  law  a  separate  action 
against  each  was  indispensable.^^ 

§  172.  Liabilities  assumed  by  indorser. —  The  indorser  en- 
gages (1)  that  the  negotiable  instnnnent  will  be  accepted  or 
paid,  as  the  case  may  be,  according  to  its  pui^Dort;  but  this 
engagement  is  conditioned  upon  due  presentment  or  de- 
mand, and  notice;^*  (2)  that  it  is  in  every  respect  genuine; 
(3)  that  it  is  the  valid  instrument  it  purports  to  be;  (4)  that 
the  ostensible  parties  are  competent;  (5)  and  that  he  has 
good  title  to  it  and  the  right  to  indorse  it.  And  if  it  turns 
out  that  any  of  these  engagements  but  that  first  named  are 
not  fulfilled,  the  indorser  may  be  sued  for  recovery  of  the 
original  consideration  which  has  failed,  or  be  held  liable  as 
a  party,  without  proof  of  demand  and  notice. ^^ 

10  Daniel   on  Negotiable  Instruments,   §   6G6. 

11  Brown  v.  Hull,  .33  Gratt.  27;  Bank  of  British  North  America  v. 
Ellis,  6  Sawy.  98. 

12  Evans  v.  Gee,   11  Pet.  80;  Ingalls  v.  Lee,  9  Barb.  047. 

13  Brown  v.  Hull,  33  Gratt.  29;  Patterson  v.  Todd,  18  Pa.  St.  42G. 

14  Callahan  v.  Bank  of  Kentucky,  82  Ky.  235. 

isChitty  on  Bills  [*9.'5],  IIG;  Story  on  Bills,  §  108;  Copp  v.  Mc- 
Dugall,  9  Mass.   1. 


§^   ITo-lT.").  .NATIIIK    OF    IXDOUSEMEXT.  100 

§  173.  Liability  of  indorser  "  without  recourse." —  When 
the  iiulorsciueiit  is  "  witliout  recounse  ''  the  indorser  specially 
declines  to  assume  any  responsibility  as  a  party  to  the  bill 
or  note;  hut  liy  tlic  very  act  of  transferring  it,  he  engages 
that  it  is  what  it  i)urports  to  be  —  the  valid  obligation  of 
those  whose  names  are  npon  it.  Ke  is  like  a  drawer  who 
draws  without  recourse;  but  Avho  is  nevertheless  liable  if  he 
draws  upon  a  fictitious  party,  or  one  without  funds.  And, 
therefore,  the  holder  may  recover  against  the  indorser 
"  \vithout  recourse,"  (1)  if  any  of  the  prior  signatures  were 
not  genuine;  or  (2)  if  the  note  was  invalid  between  the 
original  parties,  because  of  the  want,  or  illegality  of,  the 
consideration;  or  if  (.'5)  any  ])rior  party  was  incompetent, 
or  (4)  the  indorser  was  ^^'ithout  title. ^" 

Contrasting  the  liability  of  a  general  indorser  with  an 
indorser  without  recourse,  it  mil  be  seen  that  the  liability 
of  the  latter  embraces  all  of  the  obligations  of  the  former 
except  the  first,  viz.,  that  the  negotiable  instrument  mil  be 
accepted  or  paid,  as  the  case  may  be,  according  to  its  pur- 
port. 

§  174.  First,  as  to  acceptance  and  payment. —  The  indorser 
of  a  bill  contracts  to  pay  it  at  maturity,  if,  on  presentment 
for  acceptance,  it  is  not  accepted  according  to  its  purport, 
and  he  is  duly  notified  of  the  dishonor. ^'^  And  the  indorser 
of  an  accepted  bill,  or  of  a  notej  likewise  contracts  to  pay 
it,  if  it  be  not  duly  paid  by  the  acceptor  or  maker. ^^  It 
matters  not  what  may  be  the  cause  of  the  drawer's  or 
maker's  refusal.  The  indorser  contracts  to  pay  on  being 
<lulv  notified  that  he  refuses  to  pay.  He  therefore  war- 
rants the  solvency  of  the  parties  —  or,  in  short,  warrants 
that  it  mil  be  paid,  either  by  them  or  by  himself,  on  receiv- 
ing notice  of  their  failure. 

§  175.  Second,  as  to  genuineness. —  The  indorser  contracts 
that  The  bill  or  note  is  in  every  respect  genuine,  and  neither 

iflDumont  v.  Williamson.   18  Ohio    (N.   S.)    515:   Seelev  v.  Reed,  28 
Fed.  167;  Challisa  v.  McCrum,  22  Kan.  127. 
i7BalHngall9  v.  Gloster.  .3  East.  481. 
i-'^Ogden  V.  Saunders,   12  Wheat.  313. 


110  TKAXSKKK    1!Y    DELIVERY    AND    IN  DOUSKMEXT.  §   17G. 

forged,  tic'titious,  or  altered.  Undoubtedly,  and  by  universal 
admission,  this  principle  applies  to  the  signatures  of  the 
drawer,  acceptor,  and  nuiker  of  the  bill  or  note,  who  are 
the  original  parties,  and  it  is  often  expressed  in  language  to 
the  eifect  that  the  indorser  warrants  that  it  is  a  genuine 
instrument/"  This  rule,  however,  would  not  apply  where 
the  holder  i)rocured  the  indorsement  of  a  forged  note  with 
knowledge  of  the  forgery,  and  represented  to  the  indorser 
that  it  was  genuine,  or  where  the  holder  has  received  the 
paper  after  maturity  and  without  consideration.-*^  Whether 
or  not  the  indorser's  engagement  extends  to  the  genuine- 
ness of  prior  indorsements  is  not  so  well  settled.  Undoubt- 
edly the  indorser  admits  their  genuineness,  as  he  is  estopped 
to  deny  his  title,  which  would  otherAvisie-  be  invalid,^^  and 
notwithstanding  the  doubts  and  dissents  which  have  been 
expressed,  it  is  clear  upon  principle  that  the  indorser  w^ar- 
rants  the  instrument  throughout. ^^ 

§  176.  Third,  as  to  validity. —  The  indorser  engages  that 
the  bill  or  note  is  a  valid  and  subsisting  obligation,  binding 
all  })rioi-  })arties  according  to  their  ostensible  relations;  and 
he  may  be  held  liable  although  the  instrument  be  entirely 
null  and  void  as  between  prior  parties  themselves;  and  also 
as  between  prior  parties  and  even  bona  fide  holders  without 
notice."^  In  an  early  English  case,  where  the  suit  was  by 
the  indorsee  against  the  maker  of  a  note  void  for  gaming, 
Lee,  C.  J.,  said:  ''The  plaintiff  is  not  without  remedy, 
for  he  may  sue  Cliurch  (the  indorser)  upon  his  indorse- 
ment." "^ 

§  177.  Fourth,  as  to  competency  of  original  parties. —  The 
indorser  contracts  that  the  original  parties  to  the  l)ill  or 
note  -were  competent  to  bind  themselves,  whether  as  draw^er, 
acceptor,  or  maker;  for  otherwise,  although  ostensible,  they 

19  Edwards  on  Bills,  188,  289;  Howe  v.  MeiTill,  5  Ciish.  S3. 

20  Turner  v.  Keller,  66  N.  Y.  66. 

210^'den  V.  Saunders,  12  Wheat.  313;   Story  on  Bills.  §§   110.   111. 

22  Daniel  on  Negotiable  Instruments,  §  672. 

23  1    Parsons  on  Notes  and  Bills.  218;   Story  on  Bills,   g    190. 

24  Bowyer  v.  Bampton,  2  Stra.  1155. 


§§178,171).        FOKM    AM)    VAKIKTIKS    OF    INDORSEMENT.        Ill 

would  not  be  real  parties  to  it.  Therefore,  if  the  drawer, 
acceptor,  or  maker  became  a  party  under  duress,  or  were 
an  infant,  lunatic,  or  married  woman,  the  indorser's  con- 
tract is  broken,^^  and  he  may  be  sued  for  recovery  of  the 
original  consideration  which  has  failed,  or  upon  the  instru- 
ment itself,  without  proof  of  demand  and  notice.^*'  So,  if 
the  instrument  purported  to  be  signed  by  procuration,  he 
engages  that  there  is  competent  authority  in  the  agent.'' 

But  whether  or  noj;  the  indorser's  engagement  is  that  all 
of  the  antecedent  jjarties  are  competent  to  contract  is  ques- 
tionabler  Quite  a  number  of  cases  are  to  be  found,  both  for 
and  against  the  proposition."^ 

§178.  Fifth,  as  to  title. —  The  indorser  contracts  that  he 
has  a  good  title  to  the  bill  or  note,  and  a  right  to  transfer 
it.^^  If  he  haa^'stjolen  or  found  the  instrument,  or  other- 
wise acquired  possession  without  title,  and  it  be  payable  to 
bearer  or  indorsed  in  blank,  ho  might,  before  its  maturity, 
invest  a  bona  fide  indorsee  without  notice  mth  a  perfect 
title,  although  not  himself  possessing  it;  and  even  after  ma- 
turity, the  bona  fide  indorsee  might  get  from  him  some 
superior  rights  to  his  own.^° 

SECTION"  II. 

FORM   AND   VARIETIES   OF    INDORSEMENT. 

§  179.  As  to  place  of  indorsement. —  While  an  indorsement, 
as  its  derivation  and  meaning  would  indicate,  should  be,  and 
generally  is,  placed  on  the  back  of  the  instrument,  it  may  be 
written — although  unusual  and  irregular  —  on  any  other 
portion  of  it,  oven  on  the  face,  and  under  the  maker's  name.^^ 

25  Bowman  v.  Hiller,  130  Mass.  153;  Haly  v.  Lane,  2  Atk.  ISl ;  Rob- 
ertson V.  Allen,  59  Tenn.  233. 

-"Daniel  on  Xefrotiable  Instnimonts.  §§   G69.  G75. 

ii7  K.hvaids  on  Bills.  280;   Story  on  Bills.  §    110. 

2S  Daniel  on  Xepotiable  Instruments,  §  1570.  and  cases  cited. 

20  Williams  V.  Tishomingo  Sav.  Inst..  57  :Miss.  633;  Edwards  on  Bills, 
289. 

30  Daniel  on  Negotiable  Instruments,  §  G77. 

31  Partridge  v.  Davis,  20  Vt.  449;  Bigelow  on  Bills  and  Notes.  135. 


112  TRAXSFKK    BY    DELIVEUY   AND    IXDORSKMEXT.        ^  180. 

At  any  rate,  the  indorsement  must,  as  a  general  rule,  be 
somewhere  on  the  paper  itself,  or  attached  thereto,  and  un- 
less it  is,  the  party  cannot  be  held  liable  as  an  indorser,^'  but 
a  promise  made  on  a  sufficient  consideration  will  sustain 
an  action  upon  its  breach. ^^ 

§  180.  Allonge. —  It  is  not  necessar}',  however,  that  the  in- 
dorsement should  be  upon  the  original  bill  or  note,  in  order 
to  constitute  it  such,  in  the  full  sense  of  the  term.  It  some- 
times happens  that  by  rapid  circulation  from  hand  to  hand, 
the  back  of  the  paper  is  completely  covered  by  indorse- 
ments; and  in  such  cases  the  holder  may  tack  or  paste  on 
a  piece  of  paper  sufficient  to  bear  his  own  and  subsequent 
indorsements,  and  thereon  the  indorsements  may  be  made. 
Such  addition  to  the  original  instrument  is  called  an  allonge, 
and  it  becomes  for  the  purposes  above  named,  incorporated 
as  a  part  of  it.^"* 

§  181.  Varieties  of  indorsement. —  There  are  various  lia- 
biHties  which  may  be  engrafted  on  a  negotiable  instrument, 
evidenced  by  the  character  and  terms  of  the  indorsement 
thereon.  An  indorsement  may  be  (1)  in  full  or  (2)  in  blank; 
it  may  be  (3)  absolute  or  (4)  conditional;  it  may  be  (5)  re- 
strictive; it  may  be  (6)  without  recourse  on  the  indorser; 
and  there  may  be  (7)  joint  indorsements  of  the  instrument, 
(8)  successive  indorsements,  and  also  (9)  irregular  indorse- 
ments.^^ 

§  182.  First,  an  indorsement  in  full. —  It  is  one  which  men- 
tions the  name  of  the  person  in  Avhose  favor  it  is  made; 
and  to  whom,  or  to  whose  order,  the  sum  is  to  be  paid.  For 
instance:  "Pay  to  B.,  or  order,"  signed  A.,  is  an  indorse- 
ment in  full  by  A.,  the  payee  or  holder  of  the  paper  to  B. 
An  indorsement  in  full  prevents  the  bill  or  note  from  being 
indorsed  by  any  one  but  the  indorsee.^^  And  none  but  the 
special  indorsee  or  his  representative  can  sue  upon  it.^^ 

■"''2  Fenn  v.  Harrison,  3  T.  R.  757 ;  Daniel  on  Negotiable  lTistrument3, 
§  748o. 

33Moxon  V.  Pulling,  4  Campb.  51;  French  v.  Turner,  15  Ind.  59. 

34  Crosby  v.  Roub,  16  Wis.  622;   Folger  v.  Chase,  18  Pick.  63. 

35  Daniel  on  Negotiable  Instruments,  §   691. 
SCMead  v.  Young,  4  T.  R.  28. 

37  Lawrence  v.  Fussell,  77  Pa.  St.  4G0;  Reamer  v.  Bell,  79  Pa.  St.  292. 


§§183,184.        FORM    AND    VAKIKTIES    OF    IXDOHSEMKNT.        113 

§  183.  Second,  an  indorsement  in  blank. —  It  is  one  which 
does  not  mention  the  name  of  the  indorsee,  and  generally 
consists  simply  of  the  name  of  the  indorser  written  on  the 
back  of  the  instrument.  AVhen  the  bill  or  note  is  indorsed 
in  blank,  it  is,  as  has  been  said,  transferable  by  mere  deliv- 
ery to  the  transferee;  but  one  indo'-sed  in  full  must  be  in- 
dorsed again  by  the  indorsee,  in  order  to  render  it  trans- 
ferable to  every  intent  —  for  he  who  indorses  to  a  particular 
person,  declares  his  intention  not  to  be  made  liable  except 
by  that  person's  indorsement  over.  As  to  an  indorsement 
in  blank,  it  was  said  by  Lord  Mansfield:  "  I  sec  no  difference 
between  a  note  indorsed  in  blank  and  one  payable  to  bearer. 
They  both  go  by  deliveiy,  and  possession  proves  property  in 
both  cases."  ^^ 

The  receiver  of  a  negotiable  instrument  indorsed  in  blank, 
or  any  hona  fide  holder  of  it,  may  w^ite  over  it  an  indorse- 
ment in  full  to  himself,  or  to  another,  or  any  contract  con- 
sistent W'ith  the  character  of  an  indorsement  f^  but  he  can- 
not enlarge  the  liability  of  the  indorser  in  blank  by  writing 
over  it  a  waiver  of  any  of  his  rights,  such  as  demand  and 
notice  ;^°  and  he  cannot  fill  it  up  so  as  to  make  the  instru- 
ment payable  in  part  to  one  person  and  in  part  to  another. 
The  indorser's  contract  is  single  and  entire,  and  the  ob- 
ligation created  thereby  cannot  be  broken  into  fragments, 
and  the  indorser  required  to  pay  in  fractions  to  different 
persons.^^ 

§  184.  Third  and  fourth,  as  to  absolute  and  conditional  in- 
dorsements.—  An  abrioiute  indorsement  is  one  by  whi-jh  the 
indorser  binds  himself  to  pay,  upon  no  other  condition  than 
tho  failure  of  prior  parties  to  do  so,  and  of  due  notice  to 
him  of  such  failure  (protest  preceding  it  when  necessary, 
as  in  the  case  of  a  foreign  bill).     A  conditional  indorse- 

38  Peacock  v.  Rhodes,  2  Doug.  G33. 

"9  Evans  v.  Gee,  1 1  Pet.  80 ;  Condon  v.  Pcarce,  43  Md.  S3 ;  Johnson 
V.  Mitchell,  50  Tex.  212. 

•w  Daniel  on  Negotiable  Instruments,  §  G94. 
41  Envin  v.  Lynn.  10  Ohio  (X.  S.),  547. 

8 


114  TKA>;SFER    BY    DELIVEKV    AND    INDORSEMENT.  §   185. 

ment  is  one  by  wliieli  the  indorser  annexes  some  other  con- 
dition to  his  liability.  Sometimes  the  condition  is  prece- 
dent, and  sometimes  subsequent.  Thus,  "  Pay  to  A.  B., 
or  order,  if  he  arrives  at  twenty-one  years  of  age,"  or,  "  if 
he  is  livino-  when  it  becomes  due,"  is  an  indorsement  upon  a 
condition  precedent.  "  Pay  A.  B.,  or  order,  unless,  before 
payment,  I  give  you  notice  to  the  contraiy,"  is  upon  a  con- 
dition subsequent.  The  condition  attached  to  the  indorse- 
ment in  no  manner  affects  the  negotiability  of  the  paper.^^ 

§  185.  Fifth,  as  to  restrictive  indorsements. —  An  indorse- 
ment may  be  so  Avorded  as  to  restrict  the  further  negotia- 
bility of  the  instrmnent;  and  it  is  then  called  a  restrictive 
indorsement.  Thus,  "  pay  the  contents  to  J.  S.  only,"  or 
"  to  J.  S.  for  my  use,"  or  "  to  order  for  my  use,"  or  "  for 
me,"  are  restrictive  indorsements,  and  put  an  end  to  the 
negotiability  of  the  paper. ^^  Of  the  like  character  is  an  in- 
dorsement, "  credit  my  account,"  or  "  pay  J.  S.  or  order 
for  account  or  on  account  of  C.  D.,"  or  "  for  collection," 
or  "  for  collection  and  immediate  returns."  ^*  These  and 
similar  restrictive  words  indicate  that  the  indorsee  is,  merely 
an  agent  to  receive  the  money,  and  that  he  paid  no  conside- 
ration for  the  paper,  as  a  purchaser  would  not  intelligently 
accept  such  an  indorsement.  The  indorsee  in  such  a  case 
can  only  collect  the  money;  he  cannot  sell  or  hypothecate 
the  instrument  for  his  own  benefit,  nor  can  he  hold  the  in- 
dorser liable  to  himself.  The  restrictive  words  of  the  in- 
dorsement give  notice  of  the  tiiist  engrafted  upon  it,  and 
if  the  indorsee  passes  it  off  for  his  oA\m  debt,  or  in  any 
other  manner  violative  of  the  trust,  the  transferee  would 
take  it  subject  to  the  tnist."*" 

§  186.  Sixth,  as  to  qualified  indorsements,  or  indorsements 
without  recourse. — ^An  indorsement  qualified  by  the  words 
"  without  recourse,"  "  sans  recours/'  or  "  at  the  indorsee's 

42  story  on  Notes,  §   149;   Daniel  on  Negotiable  Instruments,   §  697. 

43  Wilson  V.  Holmes,  5  Mass.  543;  Williams  v.  Potter,  72  Ind.  354. 

44  First  Nat.  Bank  v.  Reno  County,  3  Fed.  257;  White  v.  National 
Bank,  102  U.  S.  658;  Continental  Nat.  Bank  v.  Weems,  69  Tex.  489. 

45  Hook  V.  Pratt,  78  N.  Y.  371  :  Claflin  v.  Wilson,  51  Iowa,  15;  Daniel 
on  Negotiable  Instruments,  §  698. 


§§  187,  1S8.        rOUM    A.NIt    VAKIKTIKS    OF    IXDORSEMENT.        115 

own  risk,"  renders  the  indorser  a  mere  assignor  of  tlie  title 
to  the  instrument,  and  relieves  him  of  all  responsi])ility  for 
its  payment,""  though  not  from  certain  liabilities  which  have 
been  already  enumerated."'^  Bnt  snch  an  indorsement  does 
not  throw  any  suspicion  upon  the  character  of  the  paper."** 

§  187.  Seventh,  as  to  joint  indorsements. —  If  a  bill  or  note 
be  made  i)ayable  to  several  persons  not  partners,  the  trans- 
fer can  only  bo  made  by  a  joint  indorsement  of  all  of  them; 
and  as  Cliitty  says,  "  If  a  bill  has  been  transferred  to  several 
persons  not  in  partnership,  the  right  to  transfer  is  in  all 
collectively,  and  not  in  any  one  indi\'idually."  *^  Where, 
however,  one  of  two  or  more  joint  payees  or  transferees  -un- 
dertake to  transfer  the  instrument,  the  extent  of  the  trans- 
fer will  depend  upon  the  nature  of  his  interest.  Such  in- 
terest, whatever  it  is,  passes  to  his  indorsee  or  assignee; 
but  nothing  beyond  that,  as  against  his  coparty,  unless  in- 
deed there  be  some  other  element  in  the  transaction  in  the 
nature  of  fraud,  agency,  or  other  circumstance,  modifying 
the  rights  of  the  parties. ^*^  No  action  could  be  maintained 
on  the  indorsement  of  one  of  the  joint  parties,^^  the  interest 
passing  thereby  being  equitable  merely. 

§  188.  Eighth,  as  to  successive  indorsements. —  When  sev- 
eral persons  indorse  a  bill  or  negotiable  note  in  succession, 
the  legal  effect  is  to  subject  them  as  to  each  other  in  the 
order  they  indorse.  The  indorsement  imports  a  several  and 
successive,  and  not  a  joint  obligation,  wdiether  the  indorse- 
ments be  made  for  accommodation  or  for  value  received, 
unless  there  be  an  agreement  aliunde  different  from  that 
evidenced  by  the  indorsements.  When  the  successive  in- 
dorsements are  for  accommodation  of  other  parties,  the  in- 

40  Wilson  V.  Codman's  Exr.,  3  Cranch,  192;  Borden  v.  Clark,  2G  Mich. 
410. 

47  See  ante,  §   173. 

48Lomax  v.  Picot,  2  Rand.  2C,0:   Kolley  v.  Whitney,  45  Wis.   117. 
40Chitly   on   Billa    [*201],   2:^2;    Daniel    on    Negotiable  Inslniments, 
§   701a. 

r.o  Brown  v.  Dickinson.   27   Gratt.  693. 
51  Caverick  v.  Vickcry,  2  Doug.  C52. 


110  TRANSFER    IJY    DELIVERY    AXI>    INDORSEMENT.  §  189. 

dorsers  for  accommodation  may  make  an  agreement  to  be 
jointly  and  equally  bound,  but  whoever  asserts  such  an  agree- 
ment must  prove  it.  In  cases,  therefore,  in  which  no  such 
ao-reement  is  proved,  the  indorsers  are  not  bound  to  con- 
tribution amongst  themselves,  but  each  and  all  are  liable 
to  those  who  succeed  them.^^ 

It  follows  from  the  principles  stated  that  while  the  right 
of  contribution  exists  between  equal  indorsers,  contribution 
does  not  arise  between  successive  indorsers.  The  presump- 
tion is  that  the  indorsements  were  made  in  the  order  ap- 
pearing upon  the  instrument,  but  it  should  be  noted,  how- 
ever, that  the  indorser  is  not  necessarily  bound  by  and  ac- 
cording to  the  actual  date  of  the  indorsement,  for  the  con- 
tract determines  the  nature  and  extent  of  his  liability;  and 
if  it  appear  that  the  instrument  was  indorsed  by  one  party 
Avith  the  agreement  that  another  should  become  prior  in- 
dorser, the  latter  will  be  held  responsible  first  in  point  of 
contract  though  second  in  point  of  time.^^ 

§  189.  Ninth,  as  to  irre^lar  intervening  indorsements. — 
There  are  some  cases  of  irregular  indorsements  that  call 
for  attention.  Thus,  suppose  a  bill  be  indorsed  specially  to 
A.,  and  then,  before  A.'s  indorsement,  there  appears  the 
indorsement  of  B.  In  such  a  case,  Alderson,  B.,  said: 
•  "  The  indorsement  only  operates  as  against  the  party  mak- 
ing it,  and  then  as  a  fresh  drawdng."  ^"^  Upon  such  an  in- 
dorsement of  a  note,  the  party  cannot  be  sued  as  a  maker. 
Littledale,  J.,  said,  in  such  a  case:  ''  It  may  be  correct  to 
say  that  an  indorsement  of  a  bill  is  in  the  nature  of  a  new 
drawing.  But  supposing  the  indorser  of  a  bill  to  be  strictly 
in  the  situation  of  a  drawer,  it  does  not  follow  that  the 
indorser  of  a  note  is  a  maker."  It  was  held,  therefore, 
that  the  party  must  be  sued  as  an  indorser;  but  that  a  prior 
party  could  not  be  sued  at  all,  as  a  link  in  the  chain  of  title 
was  lacking. *^^ 

52  Daniel  on  Negotiable  Instruments,  §  703. 

53  Daniel  on  Negotiable  Instruments,   §   704;    Chalmers  v.  McMurdo, 
5  Munf.  252 ;   Slack  v.  Kirk,  67  Pa.  St.  380. 

54  Penny  v.  Innes,  5  Tyr.   107. 

65  Gwinnell  v.  Herbert,  5  Ad.  &  El.  430. 


§^  IOO-IDlJ.      form  and  vakieties  of   indoksement.      117 

i^  190.  Party  whose  name  is  on  back  of  note  payable  to 
bearer,  or  which  has  become  so  by  being  made  payable  to 
maker's  order  and  indorsed  by  him. —  If  the  note  be  pay- 
able to  bearer  either  in  terms  or  becomes  so  in  effect  by 
being  made  payable  to  the  maker's  order,  and  then  being 
indorsed  by  him,  in  either  case  tlie  party  who  places  his 
name  on  the  back  of  it  will  bo  deemed  an  indorser  only.*^'^ 
Such  a  case  as  this,  as  said  by  Ijigclow,  J.,  in  ^Massachusetts, 
in  a  case  where  the  note  was  j)ayal)le  to  and  indorsed  by 
the  maker,  "does  not  fall  within  that  anomalous  class  of  cases 
where  a  third  person,  neither  maker  nor  payee,  puts  his 
name  on  the  back  of  a  note  before  its  indorsement  by  the 
payee,  but  is  the  ordinary  case  of  ;iii  iiidofsemcnt  of  a  note 
payable  to  bearer,  the  effect  of  which  cannot  be  varied  or 
controlled   by  parol  proof."  ^^ 

§  191.  Whether  or  not  one  not  payee  writing  his  name  on 
back  of  paper  before  him  is  an  indorser. —  When  a  note  is 
made  payable  to  the  order  of  the  payee,  and  the  name  of 
another  appears  indorsed  in  blank  upon  it,  and  was  then 
indorsed  before  the  note  was  delivered  to,  or  indorsed  by, 
the  payee,  a  very  different  question,  and  one  upon  which 
the  authorities  are  very  much  at  issue,  arises.  In  such  cases 
such  person  does  not  appear  upon  the  face  of  the  paper  to 
have  held,  and  to  have  transferred  the  title,  but  rather  to 
have  placed  his  name  upon  its  back  and  to  add  strength  and 
credit  to  it,  and  thus  render  it  more  easy  of  circulation; 
and  the  inquiry  is  presented  whether  he  intended  to  bind 
himself  for  its  pajTuent  as  a  joint  maker  or  surety,  as  a 
guarantor,  or  only  as  an  indorser,^  whose  liability  can  only 
be  fixed  by  due  demand  and  notice.''''^ 

§  192.  Conflict  of  decisions. —  Koferring  to  the  question  pre- 
sented in  the  foregoing  paragra]»li,  it  may  be  stated  that  one 
class  of  cases  adhere  to  the  view  that  such  party  is  a  joint 

fit!  Dubois  V.  Mason,  127  Mass.  37;  National  Bank  v.  Dorset  Marble 
Co..  ()1   Vt.    10(). 

•'"'7  Rif^elow  V.  Colton,  13  fJray,  30!);  Daniel  on  Negotiable  Instruments, 
S  707a.  • 

68  Daniel  on  Negotiable  Instruments.  §  709. 


lis  TRANSFEII    BY   DELIVERY   AXD    II^DORSEMEXT.  §  193. 

maker;  another,  that  he  is  presumably  a  surety  or  guaran- 
tor in  the  form  of  a  joint  maker ;  another,  that  he  is  sec- 
ondarily liable  as  a  guarantor;  another,  that  he  is  presuma- 
bly a  second  indorser,  and  still  another,  that  he  is  prima 
facie  first  indorser.  The  authorities  in  support  of  the  five 
conflicting  views  stated  will  be  found  collated  in  the  notes 
to  sections  713  to  715,  inclusive,  of  Daniel  on  Negotiable 
Instruments. 

Very  many,  if  not  a  majonty,  of  the  cases,  including  the 
Supreme  Court  of  the  United  States,  support  the  view  that 
such  party  should  be  regarded  as  a  joint  maker;  yet,  upon 
reason,  it  would  seem  that  the  party  who  puts  his  name  on 
the  back  of  a  negotiable  instrument  before  it  is  indorsed 
by  the  payee  should  be  presumed  to  be  a  first  indorser. 
Parties  often  so  sign  their  names  for  accommodation  of  the 
maker,  and  are  themselves  as  much  surprised  as  the  hold- 
ers of  the  paper  to  find  that  difficult  questions  arise  as  to 
the  nature  of  their  obligation.  And  the  law  merchant 
should,  in  its  elasticity  to  fit  all  manner  of  commercial  trans- 
actions, recognize  customary  transactions,  and  apply  to  them 
the  natural  and  simple  presumptions  that  render  them  in- 
telligible and  practical.  Strained  technical  dissertations  and 
conclusions  have  so  bungled  and  confounded  the  question 
which  we  have  considered,  that  a  fresh  mind  investigating 
it  is  lost  in  labyrinths  of  suggestion  and  decision,  while  as 
we  think  an  easy  solution  may  be  found  in  adopting  the 
views  above  presented. 

§  193.  Admissibility  of  parol  evidence  to  ascertain  inten- 
tion as  between  immediate  parties. —  The  authorities  very 
generally  concur,  though  not  with  entire  unanimity,  that, 
as  between  the  inmaediate  parties,  the  interpretation  ought 
to  be  in  every  case  such  as  will  cany  their  intention  into 
effect,  and  that  their  intention  may  be  made  out  by  parol 
proof  of  the  facts  and  circumstances  which  took  place  at 
the  time  of  the  transaction.^^  If  the  person  w^ho  places  his 
name  on  the  back  of  the  note  before  the  payee  intended 

fiOGood  V.  Martin,  95  U.  S.  95;  Key  v.  Simpson,  22  How.  241. 


^§   11(4,  lt>5.        FORM    AND    VAUIliTIES    OF    IXDOliSEMKNT.        Ill) 

at  the  time  to  be  bound  to  the  payee  only  as  a  guarantor 
of  the  maker,  he  shall  not  be  deemed  to  be  a  joint  prom- 
isor or  an  absolute  promisor  to  the  payee.*^  If  he  intended 
to  bind  liimself  as  a  surety  or  joint  maker  of  the  note,  he 
Anil  not  be  permitted  to  elaim  afterward  that  he  was  only 
a  guarantor.''^  And  if  he  intended  to  be  bound  only  as  an 
indorser,  the  better  opinion  is  that  this  also  may  be  shown 
as  between  him  and  the  payec.^" 

§  194.  Parol  proof  between  remote  parties. —  Whether  or 
not  there  is  the  same  liberty  in  the  use  of  parol  proof  when 
the  note  has  been  passed  to  a  bona  fide  holder  for  value,  and 
without  notice,  is  a  question  upon  which  the  authontics  are 
by  no  means  so  unifonii.  Some  of  them  confine  parol  proof 
to  cases  in  which  the  note  is  still  in  the  hands  of  the  orig- 
inal party  to  whom  it  was  first  delivered  as  a  valid  instru- 
ment;^^ but  others  declare  that  it  is  equally  competent  in  a 
suit  by  a  lona  fide  holder  on  the  ground  that  the  contract 
is  ambiguous.*^  In  a  comparatively  recent  case  before  the 
United  States  Supreme  Court,  where  the  question  arose  be- 
tween a  bona  fide  indorsee  and  the  original  party  so  sign- 
ing his  name,  the  court,  while  recognizing  "  irreconcilable 
conflict  "  of  the  authorities,  said:  "  But  there  is  one  princi- 
ple upon  the  subject  almost  universally  admitted  by  them 
all,  and  that  is,  that  the  interpretation  of  the  contract  ought 
in  every  case  to  be  such  as  will  cslytj  into  effect  the  intention 
of  the  parties  and  in  most  cases  it  is  admitted  that  proof  of 
the  facts  and  circumstances  which  took  place  at  the  time  of 
the  transaction  are  admissible  to  aid  in  the  interpretation  of 
the  language  employed."  '^^ 

§  195.  Difference  between  guaranty  and  ordinary  suretyship. 
—  Guaranty  is  a  ]>cculiar  kind  of  suretyship,  as  is  also  an 

eo  Seymour  v.  Farrell,  51  Mo.  !)o ;  Woiden  v.  Salter,  90  111.  IGO. 
61  Key  V.  Simpson,  22  How.  241  ;  Walz  v.  Alback.  37  INId.  404. 
62Eberhart  v.  Page,  89  111.  550;  Mammon  v.^  Ilartman,  51  Mo.  169. 
<>3  Houston  V.  Bruner,  39  Ind.  383 ;  Whitehouse  v.  Hansen,  42  N.  II. 
18. 

<54Greenouph  v.  Smead,  3  Ohio  St.  415;  Rey  v.  Simpson,  22  How.  241. 
65  Good  V.  Martin,  95  U.  S.  95. 


120  TRANSFER    BY   DELIVERY   AND    INDORSEMENT.  §  195. 

indorsement;  but  guaranty  differs  from  indorsement,  and  it 
differs  also  from  the  ordinary  contract  of  a  surety.  The 
distinction  bet^veen  a  guarantor  and  an  ordinary  surety  is 
not  easily  defined,  and  the  terms  have  been  frequently  used 
as  convertible.  A  surety  is  generally  a  comaker  of  the  note, 
while  the  guarantor  never  is  a  maker;  and  the  leading  dif- 
ference between  the  two  is,  that  the  surety's  promise  is  to 
meet  an  obligation  which  becomes  his  own  immediately  on 
the  principal's  failure  to  meet  it,  while  the  guarantor's  prom- 
ise is  always  to  pay  the  debt  of  another.*^  A  surety  is  liable 
as  much  as  his  principal  is  liable,  and  absolutely  liable  as 
soon  as  default  is  made,  without  any  demand  upon  the  prin- 
cipal whatever,  or  any  notice  of  his  default.  He  may  be 
damaged  by  reason  of  no  demand  being  made  or  notice  given, 
and  he  may  be  sued  as  a  promisor. ^^ 

The  guarantor's  liability  is  less  stringent,  and  unless  de- 
mand is  made  within  a  reasonable  time,  and  notice  given 
in  case  of  default,  he  is  discharged  to  the  extent  that  he 
may  be  damaged  by  delay.  Thus,  if  the  debtor  has,  in  the 
meantime,  become  insolvent,  so  that  he  could  not  have  re- 
course upon  him,  he  could  not  bo  held.*^^  Thus,  we  see  the 
surety's  liability  is  primaiy  and  direct,  like  that  of  the  prin- 
cipal. The  guarantor's  is  secondary  and  collateral.  And, 
in  general,  the  guarantor  contracts  to  pay,  if,  by  the  exer- 
cise of  due  diligence,  the  debt  cannot  be  made  out  of  the 
principal  debtor,  while  the  surety  undertakes  directly  for 
the  payment  at  once,  if  the  principal  debtor  makes  default. 
As  has  been  well  said,  the  surety  "  is  an  insurer  of  the  debt; 
the  guarantor  is  the  insurer  of  the  solvency  of  the  debtor."  ^^ 
ISTor  does  his  guaranty  inure  to  the  benefit  of  an  indorser 
signing  before  him,  and  \ritli  whom  he  is  not  in  privity.'*^ 

66  2  Parsons  on  Notes  and  Bills,  118. 

67  Perry  v.  Barret,  18  Mo.  140. 

68  Perry  v.  Barret,  18  Mo.  140. 

eeKrampt's  Executrix  v.  Hatx's  Executors,  52  Pa.  525;  Arents  V. 
Commonwealth,   18  Gratt.  770. 

70  Phillips  V.  Plato,  42  Hun,  189;  Daniel  on  Negotiable  Instruments, 
§   1753. 


§  1'J6.  hVllM    AMD    VAHlJiTlES    Oi"    lM»OKSE:klEM-T.  I2l 

§  196.  Difference  between  guaranty  and  indorsement. —  Tlu- 
liability  of  u  guaruiitur  ixUo  dillers  malerially  Irom,  and  is 
more  onerous  than,  that  of  an  indorser.  The  indorser  con- 
tracts to  be  liable  only  upon  condition  of  due  presentment 
of  the  bill  or  note  on  the  exact  day  of  maturity,  and  due 
notice  to  him  of  its  dishonor.  And  he  is  absolutely  dis- 
charged by  failure  in  either  particular,  although  he  may 
suffer  no  actual  damage  whatever.  The  guarantor's  con- 
tract is  more  rigid,  and  he  is  bound  to  pay  the  amount  ui)on 
a  presentment  made,  and  notice  given  to  him  of  dishonor, 
within  a  reasonable  time.  And  in  the  event  of  a  failure  to 
make  presentment  and  give  notice  within  such  reasonable 
time,  he  is  not  absolutely  discharged  from  all  liability,  but 
only  to  the  extent  that  he  may  have  sustained  loss  or  in- 
jury by  the  delay.'^^  The  same  person  may  be  guarantor, 
and  also  indorser  of  a  note;  and  in  such  case,  while  failure 
to  give  him  due  notice  of  demand  and  nonpayment  will  dis- 
charge him  as  indorser,  he  will  still  be  bound  as  guarantor.'^ 

7t  Castle  V.  Rifkley.  44  Ohio  St.  400;  Burrow  v.  Zapp,  G9  Tex.  47G. 
73  Deck  V.  Works,  57  N.  Y.  Pr.  292. 


CnAPTER  IX. 

NATURE  AND  RIGHTS  OF  A  BONA  FIDE  HOLDER. 


SECTION  I. 

THE    RIGHTS    OF    A    BONA    FIDE    HOLDER. 

§  197.  It  is  a  general  principle  of  the  law  merchant  that, 
as  between  the  immediate  parties  to  a  negotiable  instru- 
ment —  parties  between  whom  there  is  a  privity  —  the  only 
superiority  of  such  an  instrument  over  other  unsealed  evi- 
dences of  debt  is  that  it  prima  facie  imports  a  considera- 
tion. But  a  hona  fide  holder  for  value  of  such  an  instru- 
ment takes  it  discharged  of  all  the  equities  existing  between 
antecedent  parties,  and  may  recover  on  it  although  it  be 
without  any  validity  as  between  the  parties  prior  to  himself, 
as,  for  example,  if  it  was  without  consideration  originally, 
or  the  consideration  has  failed,  or  the  instKmient  was  sub- 
sequently released  or  paid,  or  even  though  it  was  originally 
obtained  by  fraud,  theft,  or  robbery.^  This  general  rule  is 
subject  to  certain  exceptions,  treated  of  in  the  succeeding 
sections. 

It  should  be  observed,  however,  that  as  between  him  and 
his  immediate  predecessor,  or  party  between  whom  and  him- 
self a  privity  exists,  he  stands  upon  the  same  footing  as  the 
payee  of  a  note  against  the  maker.  Fraud,  illegality,  want 
or  failure  of  consideration  may  be  pleaded  against  him  by 
such  immediate  party  as  freely  as  if  the  instrument  were  not 
negotiable.^ 

§  198.  As  to  anterior  parties  to  the  transfer  of  the  instru- 
ment, the  rule  is,  as  between  them  on  the  one  part  and  the 
holder  on  the  other,  altogether  different.     They  are  not  in 

1  Daniol  on  Nefjotiable  Instrviments,  §  769a,  and  cases  cited. 

2  Daniel  on  Negotiable  Instruments,  §  810. 

[122] 


§§100,200.        KIGIITS    OF    A    BONA    FIDK    IK^I.DKK.  12:5 

privity  with  hiiu,  and  they  cannot  set  up  against  him  de- 
fenses which  might  bo  valid  as  between  them  and  any  party 
prior  to  him,  iink^ss  he  is  affected  by  such  defenses  through 
mala  fides,  notice,  or  otherwise  having  taken  the  paper  with- 
out value,  or  without  the  u^^ual  course  of  business,"^  which 
circumstances  will   be  hereinafter  discussed. 

§  199.  Meaning  of  term  "  bona  fide  holder;  "  presumption. — 
Two  propositions  may  be  considered  as  settled  principles  of 
commercial  law  —  principles  which  have  been,  for  the  most 
part,  reiterated  by  the  Supreme  Court  of  the  United  States, 
and  prevail  throughout  the  Union : 

First.  That  to  entitle  one  to  the  rights  and  protection  of 
a  purchaser  or  holder  of  a  negotiable  instrument,  as  set  out 
in  the  preceding  paragraphs  of  this  chapter,  the  paper  must 
have  been  acquired  (1)  bona  fide,  (2)  for  a  valuable  con- 
sideration, (3)  in  the  usual  and  ordinary  course  of  business, 

(4)  before  maturity,  or  rather  when  it  was  not  overdue,  and 

(5)  without  notice  of  facts  which  impeach  its  validity  as 
between  antecedent  parties.'* 

Second.  The  mere  possession  of  a  negotiable  instrument, 
produced  in  evidence  by  the  indorsee,  or  by  the  assignee 
where  no  indorsement  is  necessary,  imports  prima  facie  that 
he  acquired  it  bona  fide  for  full  value,  in  the  usual  course 
of  business,  before  maturity,  and  without  notice  of  any  cir- 
cumstance impeaching  its  validity;  and  that  he  is  the  owner 
thereof,  entitled  to  recover  the  full  amount  against  all  prior 
parties.  In  other  words,  the  production  of  the  instnunent 
and  proof  that  it  is  genuine  (where  indeed  such  proof  is 
necessary),  jjrima  facie  establishes  his  case;  and  he  may  there 
rest  it.'^ 

§  200.  What  rebuts  the  presumption. —  Countervailing 
proof  that  the  instrument  was  executed  without  considera- 
tion as  between  the  original  ]Hirties  —  as,  for  instance,  that 
it  was  executed  for  accommodation  as  between  them,  or  that 

3  Daniel  on  Negotiable  Instruments,  §   811. 

4  Daniel   on  Negotiable  Instruments.   §  769a. 

5  Daniel  on  Negotiable  Instruments,   §  812,  and  cases  cited. 


124r  KIGIITS    OF    A     UOXA    FIDE     HOLDEK.  §  201. 

the  consideration,  originally  valid,  lias  subsequently  failed 
—  does  not  impair  the  holder's  superiority  of  position,  and 
he  may  still  rest  his  case  upon  the  instrument  itself,  from 
Avhich  it  Avill  still  be  presumed  that  he  acquired  it  in  a 
manner  entitling  him  to  stand  upon  the  vantage  ground  of 
a  bona  fide  holder  for  value.*'  While  the  authorities  are 
not  uniform,  it  may  be  considered  fairly  well  settled  that 
l)roof  of  mere  misapplication  of  the  instrument,  where  it 
has  subserved  its  substantial  purpose,  does  not  shift  the  bur- 
den of  proof. 

But  if  the  maker  or  acceptor,  who  is  primarily  liable  for 
payment  of  the  instrument,  or  any  party  bound  by  the  orig- 
inal consideration,  proves  that  there  was  fraud  or  illegality 
in  the  inception  of  the  instrument ;  or  if  the  circumstances 
raise  a  strong  suspicion  of  fraud  or  illegality,  the  owner 
must  then  respond  by  showing  that  he  acquired  it  J)una 
fide  for  value,  in  the  usual  course  of  business,  while  current, 
and  under  circumstances  wdiich  create  no  presumption  that 
lie  knew  the  facts  which  impeach  its  validity.  This  prin- 
ciple is  obviously  salutary,  for  the  presumption  is  natural 
that  an  instrument  so  issued  would  be  quickly  transferred 
to  another;  and  unless  he  gave  value,  which  could  be  easily 
proved  if  given,  it  would  perpetrate  great  injustice,  and  re- 
ward fraud  to  permit  him  to  recover.^  And  if  it  be  shown 
that  the  original  owner  lost  the  bill  or  note,  then,  also,  the 
burden  of  proof  is  upon  the  holder  to  prove  his  title. ^ 

^  201.  Owner,  though  not  himself  bona  fide  holder,  acquires 
title  of  his  transferrer. —  A  transferee  can  generally  get  as 
good  a  title  as  his  transferrer  possesses,  and  it  is,  therefore, 
a  settled  principle  that  if  the  party  who  transferred  the  in- 
strument to  the  holder  acquired  the  note  before  maturity, 
and  was  himself  unaffected  by  any  infirmity  in  it,  the  holder 
acquires  as  good  a  title  as  he  held,  although  it  were  overdue 

6  Commissioners  v.  Clarke,  94  U.  S.  285;  Goodman  v.  Simonds,  20 
How.  34.3. 

7  Collins  V.  Gilbert,  94  U.  R.  761;    Crampton  v.  Perkins,  6.5  Md.   24. 

8  Union  Nat.   Bank  v.   Barber,  9  N.  W.  809. 


§20:^.  KK.iiis  or  A   i;c.\A    iii>K    iioJ.i'Ki:.  l-."» 

and  (lishonored  at  the;  time  of  traiisi(;r.''  'Jhus,  it  has  l)ec'n 
held  that  in  an  action  by  a  second  indorsee  of  a  bill  given 
for  a  snnitiglini;-  (lel)t,  ho  could  recover  ag:ainst  the  acceptor, 
although  he  took  it  overdue,  his  iudorser  having  acquired  it 
bona  fide,  without  n«.tice  l)efore  it  fell  due.^'^  And,  therefore, 
even  if  he  have  notice  that  there  was  fraud  in  the  inception 
of  the  i)aper,  or  that  it  was  lost  or  stolen,  or  that  the  con- 
sideration has  faih'd  lictween  some  anterior  parties,  or  the 
paper  be  overdue  and  dishonored,  he  is,  nevertheless,  enti- 
tled to  recover,  ])rovided  his  innnediate  indorser  was  a  bona 
fide  holder  for  value  unaffected  bv  any  of  these  defenses. 
As  soon  as  the  ])ap('r  comes  into  the  hands  of  a  holder,  un- 
affected by  any  defect,  its  character  as  a  negotiable  security 
is  established;  and  the  j^ower  of  transferring  it  to  others, 
M-ith  the  same  immunity  which  attaches  in  his  own  hands, 
is  incident  to  his  legal  right,  and  necessary  to  sustain  the 
character  and  value  of  the  instrument  as  property,  and  to 
j)rotect  the  hoita  fide  holder  in  its  enjoyment.  To  prohibit 
him  from  selling  as  good  a  right  and  title  as  he  himself  has, 
would  destroy  the  very  object  for  which  they  are  secured 
to  him  —  would  indeed  be  paradoxicaL  And  it  has  been 
justly  said  that  this  doctrine  "  is  indispensable  to  the  secur- 
ity and  circulation  of  negotiable  instruments,  and  is  founded 
on  the  most  comprehensive  and  liberal  })rinciples  of  public 
policy.  ^^ 

Ihit  this  rule  is  subject  to  the  single  exception  that  if  the 
note  were  invalid  as  between  maker  and  payee,  the  payee 
could  not  himself  by  purchase  from  a  bona  fide  holder  be- 
come a  successor  to  his  rights;  it  not  being  essential  to  such 
bona  fide  holder's  protection  to  extend  the  principle  so  far.'^ 

§  202.  Equities  of  third  persons. —  The  indorsee  of  over- 
due negotiable  paper,  even  if  his  transferrer  does  not  answer 
the  description  of  a  bona  fide  holder,  is  not  subject,  it  has 

9  Woodman  v.  Churchill,  52  Me.  58;  Bassett  v.  Avery,  15  Ohio  St.  299. 
1"  Chalmers  v.  Lanion,  1  Campb.  383. 

nSeothmd  County  v.  Hill,  132  U.  S.  117;  Porter  v.  Pilt-burg  Steel 
Co.,  122  U.  S.  2G7. 

12  Todd  V.  Wick,  3G  Ohio  St.  387;  Sawyer  v.  W  iswi'll.  !)  Allen,  42. 


12G  uujii  rs   1)1'  A   no.NA   I'litK    hoi.dkk.  §  203. 

been  held,  to  equities  wliicli  may  have  intervened  between 
remote  indorsers  and  indorsees,  but  only  to  those  which  ex- 
ist, at  the  time  of  indorsement  to  him,  between  the  princi- 
pal parties  and  the  original  holder,  and  between  himself 
and  his  o^vn  indorser.^^  But  if  there  be  an  equity  attaching 
directly  to  the  bill  or  note  itself,  it  has  been  held  in  Eng- 
land that  it  may  be  asserted  against  an  indorsee  after  ma- 
turity by  a  third  party  who  claimed  the  right  to  follow  the 
hiW*  And  if  the  equity  be  a  claim  of  some  right  to  the 
instrument  directly  attached  to  it,  we  perceive  no  good  rea- 
son why  it  may  not  be  asserted  against  an  indorsee  after  ma- 
turity by  any  party  whatsoever.^^ 

§  203.  After  maturity,  negotiable  paper  circulates,  but 
transferee  only  acquires  the  right  and  title  of  the  transferrer. 
—  After  maturity  negotiable  paper  still  passes  from  hand 
to  hand  ad  infinitum  until  paid.  Moreover,  the  indorser, 
after  maturity,  writes  in  the  same  form,  and  is  bound  only 
upon  the  same  condition  of  demand  upon  the  drawer  and 
notice  of  nonpayment  as  any  other  indorser.  The  paper 
retains  its  commercial  attributes,  and  circulates  as  such  in 
the  community;  but  there  is  this  vital  distinction  between 
the  rights  of  a  transferee  who  received  the  paper  before, 
and  of  one  who  received  it  after  maturity.  The  transferee 
of  negotiable  paper  to  whom  it  is  transferred  after  matur- 
ity, acquires  nothing  but  the  actual  right  and  title  of  the 
transferrer;^"  and  the  like  rule  applies  to  the  transferee  who 
takes  the  paper  after  a  refusal  to  accept  by  the  drawee, 
provided  he  had  notice  of  such  refusal.^^  In  other  words, 
the  transferee  of  negotiable  paper  refused  acceptance  (with 
notice  thereof),  or  overdue,  takes  it  subject  to  all  the 
equities  ■with  which  it  was  encumbered  in  the  hands  of  the 

13  Hill  V.  Shields,  81  N.  C.  250. 

14  Ames  on  Bills  and  Notes,  vol.  I,  891  ;  Benjamin's  Chalmers'  Digest, 
140. 

15  Daniel   on  Xepotiable  Instruments,    §   7266. 

ifi  Texas  v.  Hardenburp,  10  Wall.  68;   Morgan  v.  United  States.  113 

r.  S.  r,oo. 

17  0'Keefe  v.  Dunn.  6  Taunt.   305:   Bartlett  v.  Benson,   14   M.  &  W. 
733. 


§§204,205.        KKIllTS    OK    A     liO.NA     MDE     110L1jK1£.  127 

party  from  whom  lie  received  it;  for  it  comes,  to  use  Lord 
Ellenborougli's  words,  "  disgraced  to  him."  Thus,  if  he 
took  it  from  a  thief,  or  finder,  or  from  a  bankrupt  incapaci- 
tated by  law  to  make  tlie  transfer,  he  could  not  recover  on 
it,  inasmuch  as  the  thief,   tinder,  or  l)ankrupt  could  not.'** 

§  204.  Defenses  to  which  such  indorsee  is  subjected. —  But 
an  indorsee  of  an  overdue  bill  or  note  takes  ii.  subject  to 
equities  arising  out  of  the  transaction  in  which  the  instni- 
ment  was  executed,  and  existing  at  the  time  of  the  transfer, 
and  not  to  a  set-olf  arising  out  of  collateral  matters;  in  other 
words,  he  takes  the  paper  subject  to  its  existing  equities. 
This  doctrine  Avas  settled  in  England  l)y  the  case  of  Bur- 
rough  V.  JMoss,'^  and  has  been  \uiiformly  followed,  and  has 
been  held  to  apply  even  though  the  indorsee  had  notice, 
gave  no  consideration,  and  took  the  paper  on  puqwse  to  de- 
feat the  set-off.^'  But  no  equity  arising  after  the  transfer 
can  affect  the  holder.^'  He  is  therefore  subject  to  the  de- 
fense —  (1)  That  it  was  affected  in  its  inception  with  some 
inherent  vice,  as,  for  instance,  fraud,  illegality,  or  duress; 
or  (2)  that  the  consideration  failed,  or  that  payment  had 
been  made,  or  that  there  had  been  accord  and  satisfaction 
at  the  time  of  the  indorsement,  or  that  there  was  some 
equitable  defense  arising  out  of  the  transaction,  in  which 
the  paper  was  given,  which  disabled  his  indorser  in  whole 
or  in  part  to  recover.^"  Any  of  these  defenses  is  called  an 
equity  attaching  to  tlie  instrument. 

§  205.  Whether  accommodation  character  of  instrument  is 
an  equity  attaching  to  it  after  maturity. —  The  general  rule, 
that  the  purchaser  of  overdue  paper  can  stand  in  no  better 
positi(tn  tlian   his  transferrer,   does  not  apply  so  far  as   to 

isByles  on  Bills  ['IGl],  284;  Ashurst  v.  Royal  Bank,  27  Law  Times, 
IGS. 

10  10  B,  &  C.  .558. 

20  Oulds  V.  Harrison,  10  Excli.  572;  Havessler  v.  Groono,  8  Mo.  App. 
454. 

21  Baxter  v.  Little,  6  Meto.  (Mass.)  7:  Haywood  v.  Stearns,  39  Cal. 
58. 

22  Daniel  on  Negotiable  Instruinents.  g  725o. 


128  KIlillTS    OF    A    BONA    FIBE    HOLDER.  §  20G. 

iiivaliJato  bills  and  notes  drawn,  indorsed,  or  accepted  for 
accommodation,  overdue  at  the  time  they  are  negotiated  or 
transferred,  it  being-  considered  that  parties  to  accommo- 
dation paper  hold  themselves  out  to  the  public,  by  their  sig- 
natures, to  be  bound  to  every  person  who  shall  take  the 
same  for  value,  the  same  as  if  it  were  paid  to  themselves.^^ 
And  the  fact  that  the  purchaser  knew  that  the  paper  was  so 
drawn,  indorsed,  or  accepted  for  accommodation,  does  not 
weaken  his  position.^'*  This  principle  is  well  established  in 
England,  and  it  is  to  be  regretted  that  the  decisions  in  the 
United  States  do  not  uniformly  follow  the  English  rule. 

In  the  United  States  a  number  of  cases  follow  the  English 
rule,  but  in  others  it  is  presumed  that  the  accommodating 
party  intended  to  lend  his  credit  only  until  the  maturity  of 
the  paper,  and  did  not  contemplate  its  subsequent  negotia- 
tion; and  it  is  accordingly  held  that  prima  facie-  he  is  en- 
titled to  defend  against  an  indorsee  after  maturity.^^  If 
there  was  an  agreement,  express  or  implied,  not  to  negotiate 
an  acconmiodation  bill  after  maturity,  the  weight  of  author- 
ity is  justly  to  the  effect  that  such  agreement  would  consti- 
tute an  equity  attaching  to  it  upon  its  transfer  after  matur- 
ity ;^^  but  in  an  English  case,  demurrer  was  sustained  to  a 
plea  that  it  was  agreed  by  the  parties  that  the  paper  should 
not  be  negotiated  after  maturity,  knowledge  of  the  pur- 
chaser of  such  agreement  not  being  averred. ^^ 

^  206.  Rights  of  bona  fide  holder,  where  the  instrument 
originated  in  fraud  or  violation  of  authority.—  There  are 
numerous  cases  in  which  the  line  of  demarcation  between 
the  fraud  which  does  not  affect  the  bona  fide  holder  for 
value,  and  without  notice,  and  that  which  utterly  vitiates 
the  instrument  in  all  hands  whatsoever,  is  narrow  and  diffi- 
cult to  distinguish.      The  distinctions  taken  are  frequently 

2'!  Charles  v.  Marsdcn,  1  Taunt.  224;  Carrutheis  v.  West,  11  Q.  B. 
143. 

,  24Cliar]es  v.  Marsden,  1  Taunt.  224. 
2.')  Daniel   on  Negotiable  Instruments,    §    720,  and  cases  cited. 
2'i  Charles  v.  Marsden,  1  Taunt.  224;  Parr  v.  Jewell,  10  C.  B.  084. 
27Carruthers  v.  West,  11  Q.  B.   143, 


^  ;2()T.  KKJHTS    OK    A     i;().NA     IIDK     IIOI.DKI;. 


1  J'J 


very  rolincd  and  metaphysical;  hut  tlio  test  questions  to  l.o 
applied,  we  think,  are  these:  (1)  Has  the  party  sought  to 
he  (diaroed  created  an  agency  or  trust,  hy  means  of  which 
the.  fraud  has  heeu  coniniitted^  (2)  Has  ho  deliberately 
given  the  ;i|)i>earanc(>  of  validity  to  the  iustiMunent^  ('■'>) 
Has  he  coninntted  negligence  res])ecting  it,  by  means  of 
which  an  oi)])()rtunity  for  the  fraud  has  been  created^  And 
whenever  either  of  these  (piestions  can  be  answered  afhnna- 
tively  upon  a  fair  consideration  of  all  the  circumstances  of 
the  case,  the  balance  of  equity  is-  in  favor  of  the  bona  fde 
holder  for  valu(>  and  without  notiee,  the  axiomatic  i)riiici]de 
of  law  then  ai)i)lying,  that  where  one  of  two  innocent  i)er- 
sons  must  suffer,  the  one  who  creates  the  trust,  or  does  the 
act  from  which  the  loss  results,  must  bear  it. 

The  cases  in  which  the-  bond  fide  holder  cannot  recover 
will  be  separately  discussed  in  the  succeeding  section  of  this 
chapter.^^ 

§  207.  Instrument  completed,  but  not  delivered. —  While  it 
cannot  be  said  that  the  authorities  are  uniform,  it  may  be 
stated  to  be  safely  settled  that  if  a  negotiable  instrument 
has  been  fully  completed  in  fonn  and  sigiied  by  the  drawer 
or  maker,  and,  before  delivery,  is  stolen  from  the  possession 
of  the  ])arty  who  has  signed  it,  and  passed  by  the  thief  to 
a  bond  fide  holder  for  value  in  the  usual  course  of  business, 
it  would  afford  him  no  defense  against  such  bona  fide  holder. 
AVhether  the  instrument  be  payable  to  bearer,  or  to  the  or- 
der of  the  thief,  if  it  be  indorsed  by  him,  we  can  see  no 
reason  why  the  bona  fide  holder  should  not  be  entitled  to 
recover.  The  want  of  delivery  is  a  defect  not  apparent  on 
the  face  of  tlu>  bill  or  note.  The  party  has  given  the  ap- 
pearance of  validity  to  his  paper.  His  signature  is  itself  an 
assurance  that  his  obligation  has  been  perfected  by  delivery; 
and  it  being  necessary  that  the  loss  should  fall  upon  one 
of  two  innocent  parties,  it  should  fall  upon  the  one  whose 
act  had  ojiened  the  door  for  it  to  enter."'^ 

28  See  pofif,  §§  21S-22.1. 

20  Daniel  on  Xefjutiable  Instruments,  §  8.37;    Kinyon  v.  Wohlford,  17 
Minn.  230. 

9 


130  RIGHTS    OF    A    BONA    FIDE     llOLDKU  §§   208,  209. 

§  208.  Where  tlie  maker  has  perfected  the  instrument,  and 
left  it  undelivered  in  a  safe,  desk,  or  other  receptacle,  it 
shonld  then  he  at  his  hazard.  Such  papers  are  made  for  use, 
and  not  for  preservation.  The  maker  creates  the  nsk  of 
their  being  eloigned,  by  keeping  them  on  hand,  and  })laces 
them  on  the  same  basis  as  negotiable  papers  wliich  have 
been  put  upon  the  market.  When  once  issued  the  pur- 
chaser is  protected  and  the  owner  loses,  even  though  he  had 
guarded  his  property  with  bolt  and  bar;  and  if  bankers  and 
others  who  must  necessarily  be  in  possession  of  negotiable 
securities  in  the  course  of  trade  are  not  protected,  we  can 
discover  no  principle  Avhich  can  be  invoked  to  protect  one 
who  holds  his  own  paper  contrary  to  the  ordinar)^  wants  and 
usages  of  trade. ^" 

But,  as  will  be  seen  in  a  succeeding  section,  if  the  in- 
strument be  incomplete,  and  there  has  been  no  delivery  of 
it  to  an  agent  in  trust  or  otherwise  intervening,  no  negli- 
gence can  be  imputed  to  the  maker,  and  he  is  not,  there- 
fore, bound,  even  to  a  ho7ia  fide  holder  without  notice. ^^ 

g  209.  When  instrument  has  been  intrusted  to  another  with 
blanks. —  If  the  party  sought  to  be  charged  upon  the  nego- 
tiable instrument  has  been  betrayed  by  his  agent,  or  some 
other  party  to  whom  he  has  intrusted  his  signature  on  a 
blank  paper,  and  who  has  fraudulently  written  over  it  a  bill 
or  note.  There  is  no  doubt  that  if  the  bill  or  note  were 
complete  with  the  exception  that  there  was  a  blank  left  for 
the  sum,  the  parties  who  had  signed,  accepted,  or  indorsed 
it  would  be  bound  to  pay  any  sum  with  which  it  might  be 
filled  up  to  a  bona  fide  holder  without  notice  of  the  .limita- 
tion of  authority  to  the  agent  or  other  person  having  it 
in  hand,'^^  and  it  is  immaterial  that  such  holder  knew  that 
it  had  been  signed,  accepted,  or  indorsed  in  blank,  unless 

30  Thompson  on  P.ills  (Wilson's  ed.),  92;  1  Parsons  on  Notes  and 
Bills,  114. 

••51  See  post,  §  223. 

32  Michigan  Bank  v.  Eldred,  9  Wall.  .544 :  Violett  v.  Patton,  5  Craneh, 
142. 


§  210.  RIGHTS    OF    A    IJOXA     FlUK    IIOLDEK.  131 

ho  was  also  cognizant  of  its  being  fraudulently  tilled  up.-'^ 
Jf  ho  knew  when  he  took  the  paper  that  authority  as  to 
filling  it  up  was  exceeded,  he  could  not  recover.'^"* 

It  seems,  also,  to  be  well  settled  that  if  the  party  sought 
to  be  charged  has  intrusted  his  blank  signiature  to  an  agent 
or  other  person,  and  has  authorized  such  agent  or  other  per- 
son to  till  the  l)lank  in  sonic  form,  for  some  purpose,  that 
he  would  be  bound  to  a  bona  fide  holder  if  the  agent  or  per- 
son wrote  over  such  signature  a  bill  or  note.  Thus,  where 
papers  indorsed  in  blank  were  left  with  a  clerk,  with  author- 
ity to  use  them  for  certain  purposes,  and  they  were  fraudu- 
lently obtained  from  him  and  used  differently,  the  indorser 
was  held  liable."'' 

§  210.  When  executed  under  mistake  and  misrepresentation. 
—  If  the  party  possesses  ordinary  faculties  and  knowledge, 
and  is  betrayed  into  signing  a  bill  or  note  by  the  assurance 
that  it  is  an  instalment  of  a  different  kind,  and  is  guilty  of 
any  negligence  in  signiing  the  paper,  it  is  generally  agreed 
that  he  is  bound  ;^''  and  the  act  itself  can  hardly  be  com- 
mitted ^^dthout  negligence.^'^  A  man  has  no  right  to  have 
eyes  and  see  not;  or  ears  and  hear  not;  and  while  the  law 
should  protect  those  who  suffer  from  the  want  of  the  senses 
in  their  proper  development,  or  ordinary  education,  it  should 
not  pemiit  those  M'ho  have  both  capacity  and  education  to 
throw  the  burden  of  their  failure  to  use  them  upon  inno- 
cent third  parties.  In  such  cases  we  should  say  the  act  of 
signing  the  paper  without  intending  to  do  so,  as  a  general 
rule,  imported  negligence  per  se,  and  rendered  the  party 
liable.^®  If  he  has  full  and  unrestricted  means  of  ascertain- 
ing the  true  character  of  the  instniment  before  signing  it, 
but  neglecting  to  avail  himself  of  such  means  of  infonna- 
tion,  and  relying  on  others'  representations,  he  signs  and 

33  Huntington  v.  Branch  Bank,  3  Ala.   186. 

34Cle\ver  v.  Wynn.  59  Ga.  24fi. 

■"fS  Putnam  v.  Sullivan,  4  Mass.  45. 

36  Chapman  v.  Rose,  44  How.  Pr.  364 ;  Ruddell  v.  Phalor,  72  Ind.  533. 

37  First  Nat.  Bank  v.  Johns,  22  W.  Va.  520. 

38  0rt  V.  Fowler,  31  Kan.  478. 


132  EIGHTS    OF    A    BONA    FIDE    HOLDER.        §§211,212. 

delivers  a  negotiable  paper,  instead  of  a  different  paper, 
which  he  intended  to  sign,  he  cannot  be  heard  to  impeach 
it  when  it  has  been  passed  to  a  bona  fide  holder. 

AVhile  the  doctrine  herein  announced  is  supported  by  the 
strongest  cases,  in  quite  a  number  of  the  States  the  courts 
go  far  to  protect  the  defrauded  parties  to  the  paper  rather 
than  the  innocent  holders;  and  in  England  it  would  seem 
that  the  holder  under  such  circumstances  is  not  protected.^^ 

§  211.  When  delivered  by  third  party  in  violation  of  in- 
structions.—  Still  another  class  of  cases,  presenting  a  ques- 
tion somewhat  different  from  any  yet  discussed,  has  arisen 
where  parties  have  sigiied  their  names  to  hills  and  notes, 
either  perfect  in  form,  or  in  blank,  with  authority  only  to 
deliver  them  as  conqdete  and  valid  instruments  upon  condi- 
tion that  some  other  person  shall  become  a  party,  or  some 
contingency  be  fulfilled.  In  these  cases  it  will  be  observed 
the  person  with  whom  such  instrument  is  left  is  its  mere 
custodian,  and  not  an  agent  having  any  absolute  power  to 
dispose  of  it.  lie  is  not,  as  to  the  instrument,  an  agent 
Adth  limited  powers,  but  the  agency  itself  is  conditioned 
Tq:)on  the  happening  of  the  event  upon  which  he  is  to  be- 
come the  agent  to  deliver.  In  such  case  the  weight  of  au- 
thority in  the  United  States,  with  reason,  supports  the  view 
that  the  hona  fdc  holder  for  value  can  recover,  notwith- 
standing such  defeni-e;  but  there  is  high  authority  in  Eng- 
land for  the  contrary  view.^'^ 

§  212.  Escrows. —  In  none  of  the  cases,  however,  is  it 
maintained  that  a  bill  or  note,  either  in  full  or  in  blank,  in- 
trusted to  the  payee,  to  be  valid  upon  a  condition,  will  not 
be  binchng  if  the  condition  is  violated.  Such  deliveiy  to 
the  payee  is  in  law  absolute  and  complete;  and  whether  the 
instrimient  be  negotiable  or  imder  seal,  the  doctrines  which 
apply  when  third  parties  are  the  custodians  do  not  extend 
to  them.^^  An  instrument  under  seal  deposited  \rith  a  third 
party,  to  be  delivered  upon  condition,  is  called  an  escrow; 

39  Daniel  on  Negotiable  Instruments,  §  8.50. 

40  Daniel  on  Negotiable  Instruments,   §  8.54. 

41  Massman  v.  Holscher,  49  Mo.  87. 


§213.  ituiirrs  ok  a    ho.na    i  idi-;    iioi,i>i-.i;.  \''>-) 

and,  aceonliiig  to  some  English  and  Aiuericau  decisions,  a 
negotiable  instruinciit,  may  also  ho  deposited  with  a  third 
party  as  an  escrow,  and  tliC  parties  to  it  will  not  be  bound 
if  the  depositary  issue  it  in  breach  of  the  trust  reposed  in 
him.''2 

§  213.  Difference  between  sealed  and  unsealed  instruments. 
—  It  shoidd  be  borni-  in  mind  that  there  is  a  cardinal  dis- 
tinction between  the  perversion  of  instruments  in  form  ne- 
gotiable, or  capable  and  intended  to  be  made  so  in  a  certain 
conting-encv,  and  that  of  instruments  under  seal.  The  lat- 
ter, when  comi)leted,  may  be  delivered  to  third  persons  — 
that  is,  to  other  than  the  parties  —  with  authority  only  to 
deliver  them  upon  condition;  and  in  such  case,  if  the  con- 
dition be  violated,  the  ])arty  intending  to  be  only  condition- 
ally bound  will  not  be  bound  absolutely. ^^  A  sealed  instru- 
ment so  delivered  to  a  third  person  is  called  an  escrow. 

But  negotialde  instruments,  as  it  seems  to  us,  stand  on  a 
different  footing  entirely.  They  are  letters  of  credit,  and 
j)roclamations  that  all  is  right  to  every  purchaser  or  trans- 
feree; and  one  who  chooses  to  put  his  name  on  an  instru- 
ment possessing  these  characteristics,  instead  of  confining 
his  liability  by  shajuug  it  in  a  form  expressive  of  his  mean- 
ing, fhould  not  lie  ])ermittod  to  ensnare  others,  and  escape 
himself  unscathed.  To  bold  otliorwise  would  be  a  wide  de- 
parture from  the  principles  wliicdi  ramify  the  law  merchant, 
and  would  bo  as  repugnant  to  reason  as  a  decision  that  an 
instrument  absolute  on  its  face  might  be  varied  by  a  parol 
condition.  And  even  as  to  sealed  instruments  the  doctrine 
now  finds  favor  that,  if  complete,  and  signed  by  sureties 
with  condition  tlmt  otlioi-  sureties  shall  join,  the  signing 
sureties  will  be  bound  if  they  leave  them  ^^'ith  the  principal 
obligors,  and  then  deliver  them  without  procuring  the  ad- 
ditional sureties, ■*■*  though  it  is  otherwise  in  cases  where 
such  instruments,  when  left  with  the  obligors,  indicate  on 
their  face  that  they  are  iueomplete,  and  that  additional  par- 

42  Couch  V.  Meeker,  2  Conn.  302;  Cliii)man  v.  Tucker,  38  Wis.  43. 

*"-  Nash  V.  Fupate.  24  Gratt.  202. 

44Dair  v.  United  States,  1(5  Wall.  1  ;   State  v.  Peck.  .53  Me.  284, 


13-i  EIGHTS    OF    A    liO.XA    I'lDE    I101.DEK.  §  214. 

ties  are  contemplated/^  and  also  whei-e  the  party  taking  tliem 
has  notice  that  the  condition  is  violated."**'  If  the  scaled 
instrument,  perfect  on  its  face,  he  left  ^^^th  the  obligee, 
npon  condition  that  it  should  be  valid  only  upon  its  execu- 
tion by  a  third  person,  the  delivery  is  complete,  and  it  is 
valid  and  operative  though  not  so  executed.^^ 

g  214.  Defenses  excluded  by  estoppel  in  pais. —  Defenses 
that  might  utlierwise  be  successfully  interposed  against  the 
bona  fide  holder  for  value  may  be  excluded  by  reason  of  the 
representations  or  conduct  of  the  defendant,  which  is  called 
in  law  estoppel  i)i  pais.  Thus,  if  the  holder  purchased  the 
note  with  the  defendant's  knowledge  and  consent,  it  has 
been  held  that  the  latter  cannot  set  up  prior  payment,  or 
other  defense  against  it.''^  It  is  to  be  observed  that  estop- 
pel does  not  arise  unless  the  act  or  course  of  conduct  alleged 
to  constitute  it  is  acted  upon  by  the  party  seeking  to  benefit 
by  it,"*^  and  therefore  a  statement  made  by  the  maker  to 
the  indorser  of  a  note  after  he  acquires  it,  that  it  is  all 
right,  does  not  amount  to  cstoppel.^^  Iv^or  does  it  arise 
where  there  is  a  mistake  or  misunderstanding  as  to  the 
identity  of  the  note  concerning  which  the  representation 
is  made.^^ 

Eepresentations,  referring  only  to  the  then  existing  status 
of  the  instrument,  will  not  exclude  defenses  subsequently 
arising.^^  And  where  they  are  made  by  an  indorser,  and 
not  by  the  maker,  they  bind  the  former,  but  not  the  lat- 
ter. ^^  This  plea,  on  the  part  of  the  plaintiff,  which  excludes 
the  right  of  the  defendant  to  set  up  the  true  condition  of 
affairs  as  a  defense,  is  called  "  estoppel  in  pais,"  it  being 
an  extraneous  matter  dehors  the   record.     And  whenever 

45  Ward  V.  Churn,  18  Gratt.  801. 
40Xash  V.  Fugate,  ,32  Gratt.  595. 
47Simonton's  Estate,  4  Watts,  180;   Duncan  v.  Pope,  47  Ga.  445. 

48  Downer  v.  Reed,  17  Minn.  493. 

49  Moore  v.  Robinson,  62  Ala.  537. 

50  Crossan  v.  May,  68  Ind.  242 ;  Hoover  v.  Kilander,  83  Ind.  420. 

51  Eriekson  v.  Roehm,  33  Minn.  53. 

52  Maury  v.  Coleman,  24  Ala.  381;  Allen  v.  Frazee,  85  Ind.  283. 
53Do\vee  v.  Schutt,  2  Den.  021. 


§§  215,  210.        lIKillTS    OK    A     liOXA     FIDK     11  (;  I.DKi;.  1^5 

it  is  r(;lied  upon  wlierc  the  system  of  coninion  law  pleading 
prevails,  it  has  hceii  held  that  it  must  Ik;  specially  pleaded.^'* 

§  215.  Good  faith  essential  to  estoppeh —  It  is  to  be  ob- 
served respecting  estoppel  that  while  it  exacts  good  faith 
from  the  l)arty  bound,  it  likewise  exacts  good  faith  in  the 
party  dealing  with  him.  Therefore,  if  the  latter  is  himself 
cognizant  of  a  fraud  ujjou  the  maker  at  the  time  of  the  pur- 
chase, and  knows,  also,  that  the  maker  is  ignorant  respect- 
ing it,  good  faith  would  require  that  he  should  inform  the 
maker  of  it,  and  if  he  does  not  so  inform  him,  the  maker  will 
not  be  estopped  by  having  told  the  purchaser  that  the  note 
was  all  right,  and  would  be  paid  at  maturity,  from  setting 
up  the  fraud  of  which  the  purchaser  had  notice. ^^  And  so 
the  holder  will  not  be  protected  if  he  knew  of  any  illegality 
in  the  instrument.^"  In  other  words,  estoppel  is  a  plea  that 
is  born  of,  and  must  be  nourished  by,  equity,  and  he  that 
asks  equity  must  do  equity.  If  he  conceals  facts  from  the 
maker  lie  acts  inequitably  and  cannot  recover. ^^ 

§  216.  Amount  of  recovery;  general  rule. —  The  holder  may 
recover  tlu^  full  amount  if  the  note  was  made,  or  bill  ac- 
cepted, upon  a  valuable  consideration.  And  even  if  there 
was  no  consideration,  as  between  the  original  ])arties,  but 
a  mere  becoming  a  party  for  accommodation,  the  holder, 
although  he  knew  the  fact,  could  recover  the  whole  amount, 
provided  he  ])aid  full  value. ^''*  But  if  he  paid  less  than  full 
value,  it  is  a  matter  of  dispute  whether  or  not  he  is  limited, 
in  his  recoveiy,  against  the  maker,  to  the  amount  advanced. 
The  English  courts  sustain  the  affirmative  of  the  proposition, 
but  the  authorities  in  the  United  States  are  directly  at  war. 
The  true  doctrine  seems  to  be,  that  the  party  paying  less 
than  its  face  value  for  paper  made,  accepted,  drawn,  or  in- 
dorsed for  accommodation,  and  not  kno\\'ing  the  fact  at  the 
time  of  purchase,   is  entitled  to  recover  the   full   amount 

f'-*  Davis  V.  Thomas,  5  Leijjh.   1. 
fir.  Saikett,  v.  Kellar.  22  Ohio  St.  .554. 
50  Watson  v.  Hoa^,  40  Iowa.  14.1. 
f'T  Piatt  V.  .Teronip.  2  Blatehf.   ISO. 
58  Charles  v.  Marsden.   1  Taunt.  224. 


136  KKJIITS    OF    A    BONA    FIDE    HOLDER.  §  217. 

against  the  ac'coininodation  parties,  because  they  have  delib- 
erately and  iiitentioiially  put  forth  themselves  to  be  treated 
as  being  bound  in  the  manner  indicated.^''*  But  the  view  has 
been  taken  in  a  number  of  cases  that  he  is  ordy  a  hand  fide 
holder  to  the  extent  of  the  consideration  paid  by  himself  or 
a  prior  party,  and  can  recover  that  only  against  the  accom- 
modation party.^"  And  even  if  he  knew  they  were  accom- 
modation parties  at  the  time  of  purchase,  it  would  make  no 
difference,  provided  the  party  he  purchased  it  from  was  a 
bona  fide  holder,  who  could  himself  enforce  it,  or  was  a 
subsequent  holder  to  the  parties  between  whom  the  accom- 
modation existed,  and  appeared  to  the  purchaser  to  be  him- 
self a  bona  fide  holder,  and  not  an  agent  for  any  of  the  par- 
ties to  the  aceonnnodation.*'^ 

§  217.  Amount  of  recovery  when  bill  or  note  has  inception 
in  fraud.- —  AVhen  the  execution  of  the  bill  or  note  lias  l)cen 
in(hic('d  by  fraud,  a  different  rule,  according  to  a  number 
of  authorities,  would  apply.  The  bona  fide  holder  of  it  for 
value,  and  without  notice,  is  undoubtedly  entitled  to  be  pro- 
tected against  a  loss  which  would  befall  him  if  the  party  de- 
frauded were  permitted  to  set  up  the  defense  of  fraud  on 
the  part  of  the  payee  against  him,  as  we  have  already  seen. 
But  it  does  not,  therefore  (as  has  been  considered),  follow 
that  lu^  niay  recover  of  such  party  the  whole  amount,  when 
he  has  paid  a  less  sum.  For  his  protection  and  security 
against  loss,  it  is  only  necessary  that  he  should  be  paid  back 
the  amount  which  he  was  induced  to  give  for  the  instru- 
ment by  its  appearance  of  validity,  and  therefore  such 
amount  is  the  limit  of  his  recovery  against  the  drawer  or 
maker  who  was  defrauded  into  the  execution  of  the  in- 
strument.^^ But  the  United  States  Supreme  Court  has  ex- 
pressed itself  in  favor  of  the  doctrine  that  the  purchaser 

TO  Moore  v.  Baird,  .SO  Pa.  St.  1.38;  Dunn  v.  Ghost,  .5  Colo.  139. 

COHolcomb  V.  Wyfkoff,  35  N.  J.  L.  R.  37;  Stoddard  v.  Kimball,  6 
Cush.  4fi9. 

'H  Ilolconil)  V.  WyckofT.  .3.-)  N.  ,T.  L.  R.  37 ;  Gimnii  v.  Cullen,  20  Gratt. 
439. 

'ailolcoiiil)  V.  Wvfkof!',  3.-)  X.  .7.  L.  R.  38;  Story  on  Bills,  §  188. 


§§  218,  219.  EXCEPTIONS    TO    HCLE,  DJT 

of  a  negotiable  securitv  hct'oro  maturity,  in  cases  wlicif 
he  is  not  personally  chargeable  \\'ith  fraud,  is  entitleil  to 
recover  its  fall  amount  against  its  maker,  though  he  may 
have  paid  less  than  its  par  value,  whatever  may  have  been 
its  original  infirndty,  and  this  view  s^eems  to  be  the  settled 
conclusion  of  that  tribunal."^ 

Where,  however,  some  legal  consideration  exists  in  tlu; 
inception  of  the  paper,  it  seems  that  in  New  York  the  bona 
fide  holder  may  recover  the  full  amount,  no  matter  what 
amount  he  may  give  for  it."'*  This  seems  to  us  the  true  dis- 
tinction in  such  cases.  If  the  paper  is  issued  in  fraud  with- 
out consideration,  the  bona  fide  purchaser  should  be  limited 
in  recovery  to  the  amount  paid  mth  interest.*"^  But  if 
there  was  an  original  valid  consideration,  or  the  paper  was 
issued  fairly  and  intentionally  without  consideration,  then 
he  is  entitled  to  recover  the  whole  amount  regardless  of 
the  amount  he  pays.*"** 

SECTION  IT. 

EXCEPTIOXS    TO,    AXD    IMODIFICATIONS    OF,    THE    RUI-E   AS    TO 
THE   RIGHTS   OF   A    BOXA    FIDE    HOLDER. 

§  218.  Exceptions  stated. —  There  are  some  defenses  which 
are  as  available  against  a  bona  fide  holder  for  value,  and 
without  notice,  as  against  any  other  party.  They  arr  those 
which  go  to  show  that  the  instrument  was  absolutely  and 
utterly  void,  and  not  merely  voidable,  (1)  by  reason  of  the 
incapacity  of  the  party  assuming  to  contract;  or,  (2)  by  rea- 
son of  some  positive  interdiction  of  law;  or,  (3)  by  reason 
of  the  want  of  consent  of  the  party  sought  to  be  bound  to 
the  ]»arti(Mdar  contract.*'^ 

§219.  (1)  As  to  incapacity.—  If  the  maker  of  the  note 
were  aji  infant,   a  married   woman,   a  lunatic,   or  a  person 

63  Cromwell  v.  County  of  Sac,  96  U.  S.  60;  Railroad  Companies  v. 
Schutte,  103  U.  S.  118. 

wilowe  V.  Potter.  61  Barb.  357. 
«>IIol(omb  V.  Wytkoff,  35  N.  .1.  L.   38. 
f^o  Daniels  v.  Wilson.  21  Minn.  530. 
6"  Daniel  on  Negotiable  Instruments,  §  806. 


138  EIGHTS    OF    A    BONA    FIDE    IIOLDEK.        §§  220,  221. 

under  guardiaiisliip,  the  signature  would  impart  no  validitj^ 
to  it,  and  the  bona  fide  holder  could  not  recover  against 
him,  or  her,  however  ignorant  of  the  incapacity  when  he 
took  the  paper. •'^ 

§  220.  Instrument  obtained  by  imposition  on  infirm  or 
illiterate  persons. —  If  one  laboring  under  the  disadvantage 
of  some  natural  inlirmity  or  defect  of  education  has  been 
imposed  upon,  and  thereby  deceived  into  executing  a  nego- 
tiable contract,  under  the  impression  that  it  was  for  a  dif- 
ferent amount,  or  was  a  contract  of  a  different  character, 
the  defense  of  fraud  and  imposition  avails  against  a  bona 
fide  holder  for  value.  The  case  suggested  is  closely  allied 
in  principle  to  the  defense  of  incapacity.  Thus,  if  a  note 
were  fraudulently  or  falsely  read  to  a  blind  man,  and  he 
were  to  sign  it  believing  it  to  have  been  correctly  read;  or 
if  the  party  were  unable  to  read,  and  signed  a  note,  after 
due  inquiiy  and  precaution,  under  the  assurance  that  it  was 
an  agreement  of  a  different  kind,  we  should  have  a  new  ele- 
ment entering  into  the  consideration  of  his  liability.  In 
such  cases  the  want  of  faculties  to  detect  the  fraud  shields 
the  party  from  its  consequences,  and  the  autkorities  justly 
exonerate  him.*^'^ 

He  has  created  no  agency  or  trust.  He  has  not  inten- 
tionally or  knowingly  given  the  appearance  of  validity  to 
the  paper.  It  cannot  be  said  that  he  has  acted  negligently, 
because  his  infirmities  prevented  that  diligence  which  men 
of  ordinary  faculties  and  of  education  possess.^" 

§  221.  (2)  As  to  instruments  declared  void  by  law —  If  the 
statute  law  pronounces  the  contract  evidenced  by  the  in- 
strument to  be  void,  because  made  upon  a  gambling,  usuri- 
ous, or  other  illegal  consideration,  it  is  an  absolute  nullity; 
and,  although  in  fonn  negotiable,  no  currency  in  the  market, 
and  no  degree  of  innocence  or  ignorance  on  the  part  of 

<^  Daniel  on  Negotiable  Instruments,  §  80Ga. 

©9  Putnam  v.  Sullivan,  4  Mass.  45;  Schuylkill  County  v.  Copley,  67 
Pa.  St.  .386. 

'lO  Daniel  on  Negotiable  Instruments,  §  847. 


§222. 


KXCr.I'TIOXS    TO    RULE.  i'^'^ 


the  holder  can  impart  any  vahdity  to  it.''  But  althouj^h 
the  party  executing  such  bill  or  note  cannot  be  bound  even 
to  a  bona  fide  holder,  the  indorser  will  be  liable  upon  his 
indorsement,  which  warrants  its  validity,  and  is  a  separate 
and  independent  contract.'"  And  in  many  localities  nego- 
tiable instruments  executed  ui)()n  gaming  or  usurious  con- 
siderations are  upon  the  same  footing  as  those  executed  for 
other  illegal  considerations  —  that  is,  void  between  the  par- 
ties, but  valid  in  the  hands  of  a  bona  fide  holder." 

But  sometimes  the  statute  declares  a  contract  void  as  be- 
tween original  parties,  and  in  such  cases  a  bona  fide  pur- 
chaser is  not  affected  by  the  illegality;^*  and  when  the  in- 
strument was  executed  upon  an  illegal  consideration,  es- 
pecially if  illegal  by  statute  (but  not  absolutely  avoiding 
the  instnnnent),  it  throws  upon  the  holder  the  burden  of 
proving  bona  fide  ownership  for  value.'^^  But  a  fajlure  of 
consideration  does  not  throw  this  burden  upon  him.'*^  And 
in  all  cases  where  the  statute  does  not  declare  the  instru- 
ment void,  bona  fide  ownership  for  value  being  proved,  the 
holder  is  entitled  to  recover. '^^ 

§  222.  (3)  Want  of  consent. —  So  where  the  party  has  never 
in  fact  signed  the  instrument  as  it  then  stands,  as,  for  in- 
stance, where  it  was  forged  in  its  inception,  and  is  not 
genuine,  or  was  subsequently  materially  altered;  or  if  such 
signature  were  Avritten  on  the  fly-leaf  of  a  l)ook  loaned  to 
such  person,  or  in  an  album,  or  were  left  with  him  for  any 
legitimate  purpose,  such  as  to  be  used  as  a  means  of  identi- 
fying the  writer's  hand^\^^ting."^    In  such  cases  the  bona  fide 

71  Sondheim  v.  Gilbert,  117  Ind.  76;  Harper  v.  Young,  112  Pa.  St. 
419. 

73  Daniel  on  Negotiable  Instruments,  §  671    et  seq. 
7:tIIaiglit  V.  .Joyce,  2  Cal.  ()4 :  Cheney  v.  Cooper,  14  Nebr.  415. 

74  Paton  V.  Coit,  5  Mich.  .505. 

"SVallett  V.  Parker,  6  Wend.  615;  .lohnson  v.  Meeker.  1  \Yis.  43G. 

76  Wilson  V.  Lazier,  11  Gratt.  478. 

77  Williams  v.  Cheney,  3  Gray.  215;  Hubbard  v.  Cliapin,  2  Allen,  328. 

78  Indiana  Nat.  Bank  v.  Holtzclaw,  98  Ind.  85 :  Caulkins  v.  Whisler, 
29  Iowa,  495;  Nance  v.  Lary,  5  Ma.  370;  Daniel  on  Negotiable  Instru- 
ments, chaps.  XLII  and  XLIII,  on  Forgery  and  Alteration. 


140  RIGHTS    OK    A     BONA     FIDE     IIOLDKK'.        §§  223,  224, 

holder  cannot  enforce  it,  for  the  defendant  has  only  to 
say:  "This  is  not  my  contract,"  "  110)1  luvc  in  fadra  veni.-' 
So  if  executed  by  one  acting  as  agent  of  the  principal,  but 
exceeding  his  authority,  the  bona  fide  holder  cannot  recover 
unless  the  principal  were  in  fault  in  inducing  him  to  believe 
that  the  agent  had  authority. '° 

§  223.  Instrument  incomplete  and  undelivered. —  A  class  of 
cases,  ilhistrativc  of  want  of  consent,  arises  when  in  an  in- 
complete instrument  has  been  signed  and  stolen,  without  any 
delivery  to  an  agent  in  trust,  or  otherwise,  intervening.  In 
such  cases  no  trust  for  any  pui-pose  has  been  created.  No 
instrument  has  been  perfected.  jSTo  appearance  of  validity 
has  been  given  it.  Xo  negligence  can  be  imputed.  There- 
fore if  the  blank  be  filled,  it  is  sheer  forgery,  in  which 
the  maker  is  in  nomse  involved,  and  he  is  not  therefore 
bound,  even  to  a  bona  fide  holder  wdthout  notice. '^'^ 

§  224.  Duress. —  Any  contract  entered  into  under  duress 
lacks  the  first  essential  of  validity  —  the  consent  of  the  con- 
tractor —  and  negotiable  instruments  form  no  exception  to 
the  rule.  As  between  immediate  parties,  proof  of  du- 
ress at  once  annuls  the  instrument,  or  rather  enables  the 
party  who  was  under  duress  to  avoid  it,  at  his  option  ;^^ 
but  whether  or  not,  in  the  hands  of  a  l)0)ia  fide  holder  for 
value  without  notice,  the  duress  in  its  inception  renders  it 
voidable,  is  a  question  upon  wdiich  the  authorities  do  not 
altogether  agree.  In  England  the  rule  seems  to  be  that  the 
defense  of  duress  cannot  be  pleaded  against  the  bona  fide 
holder  for  value,  and  the  English  doctrine  is  cited  by  many 
text-writers  on  bills  and  notes  (including  Byles,  Cliitty,  and 
Story)  without  criticism  or  dissent,  and  as  a  correct  state- 
ment of  the  law.  But  Roscoe,  in  his  Digest  of  Bills  and 
Notes,   agrees  with  the  proposition   stated  in  the  text,  as 

70Andover  Bank  v.  Ciafton,  7  N.  H.  298;  The  Floyd  Acceptance,  7 
Wall.  CGO. 

^l  Parsons  on  Notes  and  Bills,  114;  Daniel  on  Negotiable  Instru- 
ments, §  8.30. 

81  Bush  V.  Brown,  4!)  Ind.  573;  Fairbanks  v.  Snow,  145  Mass.  153. 


§225.  EXC'KI'TIONS    TO    KII.K.  141 

does  also   the  most  recent  and  lh()n>u,i;h   of  the   American 
writers  ou  tliis  subject.**" 

Whatever  may  be  said  about  tlie  cases  on  the  subject,  jjio 
and  con,  there  sairely  is  no  sound  ])rinciple  which  would 
compel  any  person,  whether  a  party  to  a  negotial)le  or  other 
kind  of  instrument,  to  pay  it,  when  under  violent  duress  — 
that  is,  under  tin?  comi)ulsion  of  force  ^^'ith  the  only  alter- 
native of  submitting  to  great  bodily  injury  or  indignity, 
(^onsent  is  of  the  essence  of  every  contract,  and  if  it  i«  not 
given,  the  party  should  not  he  bound  if  he  had  no  alterna- 
tive but  to  seem  to  give  it,  or  suffer  grievous  wrong.  lie 
creates  no  trust,  1iq  commits  no  negligence,  whereby  the  con- 
fidence of  another  can  be  betrayed.  lie  is  in  no  default, 
having  a  right  of  self-defense  in  preferring  his  own  life  and 
safety  to  the  chances  of  pecuniary  injury  to  others;  and  his 
extorted  act  is  nothing  more  nor  less  than  the  act  of  the 
wrongdoer  who  uses  his  ])erson  as  the  instrument  of  forging 
his  name,  llireats  to  intlict  slighter  wrongs  would  stand 
on  a  different  footiug.^^ 

>j  225.  Real  and  personal  defenses. —  Mv.  Xorton,  in  his 
treatise  on  the  subject  of  Bills  and  Xotes,  adopts  the  classi- 
fication of  Professor  Ames  in  his  work  on  that  subject,  and 
classifies  defenses  into  real  and  personal, —  grouping  all  de- 
fenses that  ar^  good  against  a  bona  fide  holder  for  value 
under  the  class  described  by  him  as  ''  real  defenses,"  and 
all  the  defenses  good  as  between  immediate  parties,  but  not 
available  against  a  bona  fide  holder,  he  groups  imder  the 
class  denominated  as  "  personal  defenses,"  He  thus  de- 
fines the  two  classes  of  defenses: 

"  (a)  Real  —  Or  tlios(>  that  attach  to  the  instrument  itself, 
and  are  good  against  all  persons. 

"(b)  Personal  —  Or  those  that  grow  out  of  the  agree- 
ment or  conduct  of  a  particular  person  in  regard  to  the 
instrument,  which  renders  it  inequitable  for  him,  though 
holding  the  legal  title,  to  enforce  it  against  the  defendant, 

82  Rosfoc's  Digest  of  Bills  and  Xofos.  1 17.  note  20;  1  Parsons  on  Notea 
and  "Rills,  27G. 

R-*^  Daniel  on  Xegotiable  Iiistninients,  §  858. 


142  KKWITS     OF    A    BOXA     FIDE     JIOLDKU.        §§226-228. 

but  which  are  not  available  against  bona  fide  purchasers  for 
value  ^\'itkout  notice."  *■* 

SECTIOIsr  III.  ^x. 

WHAT  CONSTITUTES  A  BOXA  FIDE  HOLDER. 

§226.  Requisites  of;  general  rule. —  As  has  been  seen,  to 
entitle  the  purchaser  or  holder  of  a  negotiable  instrument 
to  the  peculiar  rights  and  protection  set  out  in  the  first  sec- 
tion of  this  chapter,  such  purchaser  must  have  acquired  title 
to  the  instrument  (1)  ^ona  fide,  (2)  for  a  valuable  considera- 
tion, (8)  in  the  ordinary  course  of  business,  (4)  before  ma- 
turity, and  (5)  ^^'ithout  notice  of  facts  which  impeach  its 
validity  as  between  antecedent  parties. 

§  227.  Bona  fides  essential. —  The  holder,  in  order  to  be 
entitled  to  protection  against  offsets  and  equities  and  de- 
fenses based  upon  frauds,  pleaded  by  prior  parties,  must 
have  acquired  the  paper  in  good  faith  from  his  predecessor. 
"  Fraud  cuts  domi  everything,"  ^^  and  although  the  holder 
may  pay  value,  yet,  if  his  acquisition  of  the  paper  be  in  any 
respect  fraudulent  —  as  where  it  is  made  or  transferred  to 
give  him  preference  over  other  parties  to  a  compromise  of 
creditors  —  he  cannot  claim  the  position  of  a  hona  fide 
holder.^''  In  pleading,  mala  fides  must  be  distinctly  alleged, 
and  an  allegation  that  the  party  is  not  the  bona  fide  holder 
is  not  sufficient. ^■^  It  is  the  hona  fides  of  the  holder  alone 
that  is  to  be  considered,  not  that  of  his  transferrer,  and 
the  fact  that  the  payee  had  an  interest  to  part  with  the 
paper,  is  not  a  circumstance  which  affects  the  rights  of  his 
indorsee.^^ 

§  228.  Effect  of  negligence  on  bona  fides. — For  quite  a  long 
period  of  time  the  courts  of  England  oscillated  between  two 
propositions,  viz.:  "Whether  good  faith  alone,  or  good  faith 
in  conjunction  with  the  exercise  of  due  diligence,  consti- 
tuted the  test  of  the  holder's  right  to  recover.     But  the 

&4  Norton  on  Bills  and  Notes,  216. 

85  Rogers  v.  Hadley,  .32  L.  J.  Exch.  248. 

8«  Daniel  on  Negotiable  Instruments,  §  193    et  seq. 

«TUther  V.  Rifh,   10  Ad.  &  El.  7S4. 

SSHelmer  v.  Krolick,  30  Mich.  373. 


§229.        WHAT    CO.XSTITUTES    A    BONA    I'lUK     IIOLDKU.  li^i 

Court  of  King's  Uciich  linally  (Icci.lcl  that,  while  gross 
negligence  might  be  evidence  tending  to  show  mala  fides, 
and  as  such  admissible,  it  did  not  in  itself  amount  to  proof 
of  mala  fides,  and  was  not  suthcient  to  deprive  the  holder 
of  his  riiihi.  to  recover.*'*  Thus  the  hona  fides  of  the  pur- 
chaser (.r  holder  was  restored  as  the  test  of  his  right  to  re- 
cover, and,  after  a  wide  departure,  the  law  re-estabUshed 
uix.ii  the  original  basis  established  by  Lord  Kenyon.  And 
Lord  Dennian,  C.  J.,  said:  "  The  question  I  offered  to  sub- 
mit to  the  jury  was  whether  the  plaintiff  had  been  guilty 
of  gross  negligence  or  not.  I  believe  we  are  all  of  opinion 
that  gross  negligence  oidy  would  not  be  a  sufficient  answer 
where  the  party  has  given  consideration  for  the  bill.  Gross 
negligence  may  be  evidence  of  mala  fides,  but  it  is  not  the 
same  thing.  We  have  shaken  off  the  last  remnant  of  the 
contraiy  doctrine.  Where  tlic  bill  has  passed  to  the  ])lain- 
titf  without  any  proof  of  bad  faith  in  him,  there  is  no 
objection  to  his  title." 

The  rule  thus  fiiudly  re-estai)lishcd  in  England  has  been 
followed  and  ap]irove(l  there  in  subsequent  cases,^  and  has 
met  with  the  ap]n-obation  of  most  all  of  the  writers  on  ne- 
gotiable instruments,  on  the  ground  that  it  relieves  them  of 
the  clog  which  the  contrarv^  doctrine  imposes  on  their  nego- 
tiability, and  presents  at  once  the  clear  and  intelligible  ques- 
tion of  hona  fides  for  the  consideration  of  the  jury;  whereas, 
to  leave  it  to  a  jury  to  determine  as  to  the  degree  of  cau- 
tion which  a  prudent  man  must  exercise  on  taking  such  an 
instrument,  would  lead  to  much  perplexity  and  to  frequent 
miustice. 

^  229.  American  view. —  In  the  Ignited  States  the  decisions 
of  the  courts  have  varied,  some  follo\\'ing  the  rule  in  the 
ease  of  Gill  v.  Cubitt,^^  in  which  the  principle  was  laid  down 

86  Goodman  v.  Harvoy.  4  Ad.  &  El.   870. 

OOEasely  v.  Croekford.  10  V>u\<x.  24:5;  Raphael  v.  Baiik  of  England. 
33  Encr.  L.  &  Eq.  278. 

91  Story  on  Notes,  §§  197.  382;  Edwards  on  Bills,  500;  2  Parsons  on 
Notes  and  Bills.  277-279. 

02  3  B.  &  C.  400. 


144  UIliHTS    OF    A    BOXA    FIDE    HOLDER.  §  229. 

that,  although  the  hoklcr  had  given  vahie  for  the  bill  or 
note,  yet,  if  he  took  it  under  circumstances  which  ought 
to  have  excited  the  suspicions  of  a  prudent  and  eareful 
man,  he  could  not  recover,  but  by  far  the  greater  ntunber 
concurring  in  the  principle  which  has  been  finally  established 
as  the  law  of  England. ^^  Cliancellor  Kent,  in  his  Commen- 
taries embodies  the  views  taken  in  Gill  v.  Cubitt;  but  at 
that  time  the  present  prevailing  doctrine  had  not  been  re- 
established, and  it  is  to  be  supposed  that  he  merely  incor- 
porated in  his  text  the  then  existing  decisions  of  the  Eng- 
lish courts.^^  But  both  upon  principle  and  authority,  it  is 
safe  to  say  that  the  experience  of  the  commercial  world, 
and  of  the  courts  before  which  the  doctrines  here  discussed 
have  so  often  passed  in  review,  have  satisfied  jurists,  as 
well  as  men  of  business,  that  the  interests  of  commerce  are 
best  subserved  by  the  liberal  view  which  promotes  the  cir- 
culation of  negotiable  instruments;  and  that  the  bona  fides 
of  the  transaction  should  be  the  decisive  test  of  the  holder's 
rights. ^^  It  is  not  the  duty  of  parties  about  to  purchase 
negotiable  paper  to  make  any  inquiries  not  required  by 
good  faith,  as  to  possible  defenses  of  which  they  have  no 
notice,  either  from  the  face  of  the  paper,  or  facts  commu- 
nicated at  the  time.'*'' 

In  a  case  before  the  United  States  Supreme  Court,  Mr. 
Justice  Swayne,  who  delivered  the  opinion,  disapproved 
Gill  V.  Cubitt,  3  B.  &  C.  40G,  and  quoted  with  approval 
Goodman  v.  Harvey,  4  Ad.  &  El.  870,  in  which  Lord  Den- 
ham  said:  "I  believe  we  are  all  of  opinion  that  gross  neg- 
ligence only  wmihl  not  be  a  suflficient  answer  where  the 
party  has  given  a  consideration  for  the  ])ill.  Gross  negli- 
gence may  be  evidence  of  mala  frhfi,  but  is  not  the  same 
thing.  'Wo  have  shaken  off  the  last  remnant  of  the  con- 
trary doctrine.     Where  the  bill  has  passed  to  the  plaintiff 

93  See  cases   eitofl    in    support   of   both   views,   Daniel   on   Negotiable 
Instruments,  §  77.5. 
!>4  3  Kent  Comm.  10.3,  104. 

95  Hamilton  v.  Vought,  .34  N.  .T.  L.   187. 

96  Murray  v.  Beckwith,  81  111.  43;  Houry  v.  Eppinger,  34  Mirh.  29. 


g  2:30.        WHAT    CONSTITUTES    A    llONA    FIDE    HOLDER.  145 

without  any  proof  of  bad  faith  in  him,  there  is  no  objection 
to  his  titlf'."«^ 

g  230.  What  is  meant  by  valuable  consideration. —  The 
purchaser  must  have  accjuired  the  instrument  for  a  valuable 
consideration."**  In  some  cases  it  is  said  that  the  holder 
must  have  parted  with  "  full  value/'  sometimes  "  fair 
value,"  and  sometimes  the  expression  "  for  value  "  is  used. 
In  Xew  York  it  has  been  said  that  "  the.  cousideraticjii 
for  the  transfer  must  be  full  and  fair  as  well  as  valuable," 
while  in  another  it  is  said  that  ''  wdien  a  parting  with  value 
is  proved,  the  amount  of  the  consideration  is  not  othenvise 
important  than  as  bearing  on  the  que^^tion  of  actual  or  con- 
structive notice."  ^  This  latter  view  seems  to  us  the  correct 
one.  The  owner  of  a  bill  or  note  has  as  much  right  to  sell 
it  as  he  has  to  sell  his  horse.  The  prior  parties,  by  making 
it  negotiable,  have  warranted  the  right  of  the  payee  or  in- 
dorsee to  make  title  to  another. 

And  if  he  does  so  at  any  price,  the  holder  acquires  full 
rights  and  interests  in  the  instrument  as  against  all  parties, 
unless  he  had  notice  of  defects,  or  willfully  abstained  from 
inquiry  under  circumstances  which  justify  the  imputation 
of  bad  faith. 

§231.  When  price  paid  conveys  notice  of  fraud. —  The 
price  at  wliich  the  paper  is  offered  may  amount  prima  facie 
to  notice,  and  create  the  presumption  of  bad  faith  in  the 
purchaser.  If  a  person  Avere  to  offer  a  fine  horse  for  sale 
for  five  cents,  the  very  nature  of  the  offer  would  warn  the 
purchaser  that  he  acted  at  his  peril.  And  so  if  the  amount 
which  the  holder  offers  to  take  for  a  negotiable  instrument 
is  totally  insignificant  as  compared  to  its  face  value,  it  might 
be  under  the  circumstances  implied  notice  that  there  was 
something  wrong  about  it;  and  if  he  took  it  without  in- 
quiry, he  should  not  be  protected.  There  is  no  conflict  be- 
tween this  view  and  the  cases  which  liold  that  gross  negli- 

97  Murray  v.  Lardner,  2  Wall.  710. 
»8See  ante,  §§  90-1 1.'). 

ooGolflsmid  v.  Lewis  County  Bank.   12  Barb.  410:  Gould  v.  Sesree,  5 
Duer,  370;   Daniel  on  Negotiable  Instruments,  §  777. 

10 


14G 


KlGllTS    OF    A    BONA    FIDE    IIOLDEK.  §  232. 


gence  will  not  of  itself  be  sufficient  to  impeach  tlie  liolder's 
or  purchaser's  title.  This  is  not  merely  gross  negligence, 
but  may  be  regarded  as  willful  or  fraudulent  blindness,  and 
abstinence  from  inquiry,  so  great  as  to  amount  to  evidence 
of  bad  faith.  For  it  is  the  obvious  suggestion  of  reason 
that  a  hona  fide  owner  would  not  throw  away  his  property 
for  a  mere  song,  and  that  the  purchaser  acted  in  bad  faith 
Avl.en  he  ac(piired  it  for  comparatively  nothing.^ 

§  232.  Line  of  demarcation  between  negligence  and  notice. — 
It  is  difficult,  indeed  impossible,  to  lay  down  the  exact  line 
of  demarcation  and  state  Avhat  proportion  the  amount  paid 
must  bear  to  the  face  of  the  paper  in  ordei'  to  charge  the 
purchaser  prima  facie  with  notice,  or  raise  the  presumption 
of  bad  faith  on  his  part.  But,  in  general  terms,  it  may  be 
said  that  the  consideration  should  be  so  utterly  trifling  as 
to  bear  upon  its  face  the  impress  of  fraud  to  leave  open  n'o 
reasonable  conjecture  but*  that  the  purchaser  must  have 
known,  from  the  very  nature  of  the  facts,  that  they  could 
not  have  originated  fi'om  any  but  a  corrupt  source.^  The 
known  solvency  of  prior  parties  would  of  course  strengthen 
the  argument  of  implied  notice  and  bad  faith  wherever  they 
were  alleged.  If  the  amount  paid  for  the  paper  were  not  so 
insignificant  as,  per  se,  to  charge  the  transferee  with  notice, 
it  might  still  be  so  inadequate  as  to  be  a  pregnant  fact 
to  be  given  due  consideration  in  connection  with  others,  in 
determining  whether  he  should  be  so  chargeable  or  not.^ 
As  said  in  Khodc  Island  by  Potter,  J. :  ''  The  fact  that  the 
plaintiif  purchased  the  note  for  a  sum  much  below  its  face, 
even  if  he  did  not  know  of  any  equities  between  the  original 
parties,  might  be  a  circumstance  tending  to  show  that  he 
had  willfully  shut  his  eyes  to  the  means  of  knowledge  of  the 
facts."  ^ 

I.Johnson  v.  Butler,  31  La.  Ann.  776;  Smith  v.  Jansen,  12  Nebr.  125; 
Richmond  v.  Diefendorf,  58  N.  Y.  Supp.  538. 

2  Daniel  on  Negotiable  Instruments,  §§  795,  796. 

:JChoutoau  V.  Allen,  70  Mo.  341. 

4  Millard  v.  Barton,  13  R.  I.  610;  Daniel  on  Negotiable  Instruments, 
§  779. 


§233.         WHAT    COXSTITUTKS    A     ItO.NA     KIDI-:     IIOLDKII.  117 

§  233.  The  apparent  purchase  must  have  been  a  purchase 
in  fact,  and  not  a  mere  bookkeeping  entry. —  Mere  discount 
and  credit  do  not  of  themselves  constituto  a  bona  fide  pur- 
chaser  for  value.  To  occupy  that  position  the  holder  must 
actually  have  parre.l  with  s(Mue  tliin-'  of  value  for  the  n-.tc 
Thus,  where  a  hank  discoiuited  a  note  for  a  company,  and 
credited  it  with  the  amount,  the  credit,  on  account  of  other 
deposits,  subsequently  increasing,  so  that  at  the  time  of  suit 
on  the  note  the  bank  had  actually  paid  nothing  for  it,  it  was 
held  not  a  purchaser  for  value,  and  that  its  remedy  was  to 
tender  the  note  back  to  the  company,  and  cancel  the  credit.^ 

§  234.  When  taken  as  collateral  security  for  debt  con- 
tracted at  the  time. —  When  the  bill  or  note  of  a  third  i)arty, 
l)ayable  to  order,  is  indorsed  as  collateral  security  for  a  debt 
contracted  at  the  time  of  such  indorsement,  the  indorsee 
is  a  bona  fide  holder  for  value  in  the  usual  course  of  busi- 
ness, and  is  entitled  to  protection  against  equities  and  offsets 
and  other  defenses  available  between  antecedent  parties  — 
provided,  of  course,  that  the  bill  or  note  transferred  as  col- 
lateral security  is  itself  at  the  timt>  not  overdue.  And  the 
same  principle  applies  where  the  collateral  bill  or  note  is 
payable  to  bearer,  and  is  transferred  to  the  creditor  by  de- 
livery. 'Hiis  doctrine  rests  upon  clear  grounds.  There  is  an 
evident  present  consideration  for  the,  transfer  of  the  collat- 
eral bill  or  note;  a  present  change  in  the*  legal  rights  of  the 
parties.  And  the  text-writers,  su]iported  by  an  almost  un- 
broken train  of  decisions,  agree  that  the  indorsee  is  entitled 
to  protection  to  the  extent  of  the  debt  secured." 

Anc\  likewise,  when  the  debt  is  not  yet  due  and  the  col- 
lateral bill  or  note  is  indorsed  as  security  and  there  is  an 
agreement  for  delay  until  the  collateral  shall  mature,  such 

r.  .Manufacturers'  Nat.  Hank  v.  Nt'wcll.  71  Wis.  ;?12:  Dh'sscm-  v.  M.  & 
I.  R.  Co.,  93  U.  S.  02;  Lancaster  County  Nat.  Bank  v.  Ihivcr.  114  I'a. 
Bt.  21(5. 

8  Texas  Bankin-r  Co.  v.  Tmnl.  v.  CI  IVx.  30!);  Best  v.  Crall,  23  Kan. 
482;   Aliller  v.   Boykin.  70   Ala.  47(i, 


148  KIGKTS    OF    A    BONA    FIDE    HOLDER. 


235. 


agreement  by  the  creditor  constitutes  a  consideration  and 
makes  him  a  holder  for  value. 

§  235.  When  taken  as  collateral  for  pre-existing  debt. — 
When  there  if>  no  express  or  implied  agreement  for  for- 
bearance and  delay  as  to  the  pre-existing  debt,  the  transferee 
of  the  collateral  cannot  be  regarded  as  a  hona  fide  holder 
for  value  within  the  law  merchant,  unless  simply  becoming 
a  party  to  the  bill  or  note  transferred  as  collateral  security 
for  the  debt,  and  the  existence  of  the  debt,  are  sufficient  to 
create  that  relation.  Many  cases  deny  that  it  is.  But  this 
alone  is,  in  our  judgment,  sufficient.  The  maker  has  sent 
out  a  negotiable  contract  to  pay  the  bearer  or  indorsee  a 
certain  sum.  It  has  been  acquired  before  maturity  for  a 
valuable  consideration,  and  the  burden  of  fixing  the  liability 
of  the  indorser  (if  any)  assumed.  The  holder  is  naturally 
lulled  into  security  and  inactivity,  by  crediting  the  face  of 
the  note ;  and  he  should  not  be  made  to  suffer  by  the  maker 
for  confidence  which  his  own  promise  created.  In  Main- 
land this  subject  has  been  fully  considered  and  the  ^dews 
of  the  text  approved;  and  so  likewise  in  Indiana,  and  in  New 
York. 

In  the  United  States  Supreme  Court  the  question  under 
consideration  was  fairly  presented,  and  it  was  called  on  to 
determine  whether  the  transfer  of  a  negotiable  note,  merely, 
as  collateral  security  for  a  pre-existing  debt,  was  such  a 
negotiation  as  excluded  defenses  which  were  available  be- 
tween anterior  parties.  In  the  case  referred  to,  it  appeared 
that  the  Brooklyn  City  and  Newto^vn  K.  Jl.  Company  exe- 
cuted and  delivered  to  H.  &  J.  a  certain  note  for  the  pur- 
pose only  of  raising  money  for  the  company;  and  that  II. 
&  J.  indorsed  it  in  blank,  and  transferred  it  as  security  for 
a  call  loan  to  the  National  Bank  of  the  Republic.  The 
court  sustained  the  right  of  the  l:)ank  to  recover  against  the 
railroad  company,  not\\'ithstanding  the  fact  that  the  trans- 
action was  in  New  York,  in  which  State  the  decisions  of  the 
courts  are,  in  principle,  opposed  to  such  right.     And  the 

">  Daniel  on  Negotiable  Instruments,  §  825. 


§236.        WHAT    CONSTITUTES    A    BONA    FIDE    HOI.UEK.  140 

opinions  of  Judges  Harlan,  Cliiford,  and  liradley  are  most 
learned  and  able  expositions  of  the  subject  in  all  of  its  rami- 
fications.^ 

§  236.  Amount  and  mode  of  recovery. —  When  it  appears 
that  the  bill  or  note  was  acquired  by  the  holder  as  col- 
lateral security  for  a  debt,  and  he  is  deemed  entitled  to  re- 
cover upon  it,  he  is  still  limited  to  the  amount  of  the  debt 
which  it  secures,  if  there  be  a  valid  defense  against  his 
transferrer,  being  regarded  as,  at  all  events,  a  bona  fide 
holder,  and  entitled  to.  stand  upon  a  better  footing  only 
pro  tanto.^  Thus  such  a  holder  could  recover  against  an 
accommodation  party  no  more  than  the  consideration 
actually  advanced  ;^'^  but  in  the  absence  of  proof  he  ^vill  be 
deemed  to  have  advanced  the  full  amount  of  the  paper.^^ 
In  IMaryland,  however,  it  has  been  said  in  respect  to  an  ac- 
commodation note,  which  was  transferred  as  collateral  se- 
curity merely:  "  Such  being  the  case,  it  was  clearly  incum- 
bent upon  the  ])laintiff  to  show  what  debts  were  embraced 
by  the  security,  and  the  amount  due  thereon."  ^^  Although 
the  debt  secured  by  the  collateral  be  less  in  amount,  yet  if 
there  be  no  defense  to  the  collateral  note,  the  holder  may  in 
general  recover  the  full  amount,  holding  the  balance  as  a 
trustee."  If  the  paper  has  been  pledged  to  a  hona  -fide 
pledgee  in  fraud  of  the  true  o^^^ler,  as  the  pledgee  has  only 
a  lien  for  the  amount  of  his  debt,  the  time  owner  may,  by 
paying  that  debt  and  discharging  tlio  lien,  repossess  himseK 
of  the  instnunent.^"* 

SMaitland  v.  Citizens'  Nat.  Bank,  40  Md.  540;  Continental  Nat. 
Bank  v.  Townsend,  87  N.  Y.  10;  Daniel  on  Negotiable  Instruments,  §§ 
831a,  8316. 

9  Handy  v.  Sibley,  46  Ohio  St.  15 ;  Duncan  &  Sherman  v.  Gilbert,  30 
N.  J.  L.  527 ;  Fisher  v.  Fisher,  98  Mass.  303. 

lOMaitland  v.  Citizens"  Xat.  Bank,  40  :Md.  540:  Brown  v.  Callaway, 
41  Ark.  420. 

11  Duman  &  Slierman  v.  Gilbert,  30  X.  J.  L.  527. 

12  Maitland  v.  Citizens"  Nat.  Bank,  40  Md.  540. 

13  Tooke  V.  Newman,  75  111.  215. 

1-*  Stoddard  v.  Kimball,  6  Cush.  400;  Cliieopee  Bank  v.  Chapin,  8 
Mete.  (Mass.)   40. 


150  KIGKTS    OF    A    BONA    FIDE    IIOl.DER.        §§  237,  238. 

§  237.  Ordinary  or  usual  course  of  business. —  The  holder 
must  have  acquired  the  paper  in  the  ordinary  or  usual  course 
of  business,  by  which  phrase  is  meant  to  describe  a  transfer 
according  to  the  usages  and  customs  of  coimnercial  trans- 
actions.^^ Whether  or  not  a  transfer  in  payment  of  pre- 
existing debt  is  of  this  character,  was  for  a  long  time  ques- 
tioned; but  the  doctrine  is  now  settled  that  it  is.^*'  And  when 
the  paper  is  transferred  as  collateral  security  for  a  contem- 
poraneous or  pre-existing  debt,  there  are  many  variations 
of  the  question,  and  many  view^s  taken,  as  to  whether  or  not 
it  is  in  the  usual  course  of  business  for  a  valuable  considera- 
tion, according  to  the  mercantile  use  of  those  terms. ^^ 

§  238.  Transfers  which  are  not  in  usual  course  of  business. — 
There  are  some  transfers,  however,  in  which  the  legal  or 
equitable  title  to  the  instrument  passes,  but  which  are  not 
in  the  usual  course  of  business. 

Thus,  a  receiver  appointed  by  a  court,  and  who  comes  in 
possession  of  a  bill  or  note  of  a  litigant  by  operation  of  law 
acquires  no  better  title  than  such  litigant  possessed,  for,  as 
said  in  Xew  York,  "  he  acquires  title  by  legal  process,  and 
not  in  the  regular  course  of  dealing  in  conmiercial  paper."  ^^ 
The  like  decision  was  rendered  in  Connecticut,  in  respect 
to  the  receivers  of  assets  of  a  bank,  for  the  benefit  of  its 
creditors. ^^  So  the  assignment  of  a  bill  or  note  by  opera- 
tion of  a  bankrupt  or  insolvent  law,  is  an  instance  out  of 
the  usual  course  of  commercial  business.  So  also  is  a  trans- 
fer ]jy  the  payee  or  holder  to  a  trustee  for  the  benefit  of 
creditors.^  Under  statute  in  the  State  of  Iowa,  it  has  been 
held,  that  an  indorsement  of  a  note  by  the  sheriff,  who  had 
levied  upon  it,  had  the  same  effect  as  if  made  by  the  holder 
himself.^^     But  if  the  note  levied  on  were  not  the  property 

15  Kellogg  V.  Curtis,  69  Me.  212;  Elias  v.  Finnegan,  37  Minn.  145. 

iGAnfe,  §  100;   Merchants'  Bank  v.  McClelland,  1)  Colo.  611. 

iT  Ante,  §§  234,  23.5. 

iSBriggs  V.  Merrill,  .58  Barb.   379. 

l»  Litchfield  Bank  v.  Peck,  29  Conn.  384. 

20  Billings  v.  Collin.s,  44  Me.  271  ;  Roberts  v.  Hall,  37  Conn.  20.5. 

21  Earhart  v.  Gant,  32  Iowa,  481. 


§  23'J.        WHAT     COXSTITUTKS    A     I5().\A     FIDE     HOLDER.  151 

of  the  debtor,  neither  the  purchaser  nor  anyone  clauniug 
under  him  could  ac(iuire  a  title  by  its  sale  under  execution.^^ 

A  bill  or  note  in  the  hands  of  one  not  the  payee,  and 
unindorsed  where  it  is  not  payable  to  the  payee  or  bearer, 
would  be  open  to  defenses  in  the  hands  of  the  transferee, 
for  such  possession  and  transfer  are  not  in  the  usual  course 
of  business.^'  A  bill  in  the  hands  of  the  drawer,  and  payable 
to  his  order,  ndght  be  properly  acquired  from  him,  and  the 
holder  under  his  indorsement  would  be  protected  against 
defenses,  for  the  acceptor  is  the  primary  debtor,  and  the 
drawer  the  original  creditor.^ 

§  239.  Meaning  of  term  "  before  maturity." —  The  holder 
in  order  to  ac'(|uir('  a  betterright  and  title  to  the  paper  than 
his  transferrer,  must  become  possessed  of  it  before  it  is  over- 
due. For  if  it  were  already  paid  by  the  maker  or  acceptor, 
and  had  been  left  outstanding,  it  would  be  already  dis- 
charged, and  they  would  not  be  bound  to  pay  it  again  to 
anyone  who  acquired  it  after  the  period  when  payment  w'as 
due.  And  if  it  were  not  paid  at  maturity,  it  is  then  con- 
sidered as  dishonored;  and  although  still  transferable  in  like 
manner  and  form  as  before,  yet  the  fact  of  its  dishonor, 
which  is  apparent  from  its  face,  is  equivalent  to  notice  to 
the  holder  that  he  takes  it  subject  to  its  infirmities,  and  can 
acquire  no  better  title  than  his  transferrer.^  The  doctrine 
applicable  to  this  subject  has  been  admirably  stated  by  Chief 
Justice  Shaw,  who  says:  "  "Where  a  negotiable  note  is  found 
in  circulation  after  it  is  due,  it  carries  suspicion  on  the  face 
of  it.  The  question  instantly  arises:  Why  is  it  in  circula- 
tion? Why  is  it  not  paid  ?  Here  is  something  wrong.  There- 
fore, although  it  does  not  give  the  indorsee  notice  of  any 
specific  matter  of  defense,  such  as  set-off,  payment,  or  fraudu- 
lent acquisition,  yet  it  puts  him  on  inquiry;  he  takes  only 
such  title  as  the  indorser  himself  has,  and  subject  to  any  de- 

22  :\reConnit'k  v.  Williams,  54  Iowa,  50. 

23  Kempner  v.  Coiner.  73  Tex.  201;  Durein  v.  Moeser.  3(1  Kan.  44.?. 
24Merritt  v.   Duiicaii.  7   Ileisk.  1.56. 

25Morc:an  v.  I'nitod  States,  113  U.  S.  500;  Speek  v.  Pullman  Car 
Co.,  121  111.  57. 


152  RIGHTS    OF    A    BOXA    FIDE    HOLDER.        §§  240,  241. 

fense  -svliieh  niig-lit  be  made  if  the  suit  were  brought  by  the 
indorser."  ""^  But  there  is  this  limitation  to  this  doctrine: 
that  if  the  holder  acquired  the  paper  after  maturity,  from 
one  who  became  a  bona  fide  holder  for  value  and  without 
notice  before  matuntv,  he  is  then  protected  by  the  strength 
of  his  transferrer's  title. ^^ 

§  240.  When  instruments  payable  on  sight  or  demand 
deemed  overdue. —  The  test  has  been  well  and  accurately 
stated  by  Parsons  in  his  work  on  Notes  and  Bills.  He 
says:  "  A  reasonable  time  must  elapse  before  mere  non- 
payment dishonors  the  bill  or  note.  What  this  time 
is,  has  not  been  and  cannot  be  fixed  by  any  definite  and 
precise  rule.  One  day's  delay  of  paper  on  demand  certainly 
would  not  dishonor  it;  five  years  certainly  would.  And  in 
each  case,  how  many  days,  or  weeks,  or  months  are  requisite 
for  this  effect,  must  depend  upon  the  test,  whether  so  long 
a  time  has  elapsed,  that  it  must  be  inferred  from  the  par- 
ticular circumstances  and  the  general  conduct  of  business 
men,  both  of  which  should  be  considered,  that  the  paper  in 
question  must  have  been  intended  to  be  paid  within  this 
period,  and  if  not  paid,  must  have  been  refused."  ^ 

§  241.  Presumption  that  bill  or  note  is  acquired  before 
maturity. —  There  is  always  a  presumption  when  the  payee's 
or  an  indorser's  name  is  indorsed  upon  the  bill  or  note,  that 
it  was  done  before  its  maturity;  and  likewise  the  presump- 
tion that  the  holder  acquired  the  instrument  before  maturity, 
whether  the  legal  title  be  transferable  by  indorsement,  or  by 
delivery  merely.^  Indeed  the  law  will  presume  in  favor  of 
the  holder,  according  to  many  authorities,  that  the  indorse- 
ment or  assignment  was  of  even  date  Avitli  the  instrument 
itself  ;^^  but  it  can  rarely  be  the  case  that  any  stronger  or 
more  definite  presumption  will  be  needed  than  that  he  ac- 
quired it  before  maturity,  as  he  is  then  protected  against 

20  Fisher  v.  T.o]and.  4  Cush.  4.56. 
2^  Ante,  §  201. 

28  1  Parsons  on  Xolos  and  Bills,  20.3.  204. 

29  New  Orleans,  etc.    v.  Montgomery,  95  U.  S.  10. 

30  Daniel  on  Negotiable  Instruments,  §  728. 


§  242.       WHAT    CONSTITUTES    A    BONA    FIDK    HOLDER.  153 

defenses  available  to  his  transferrer.  We  can  conceive,  how- 
ever, of  cases  in  which  the  further  ])resnniption  that  the 
transfer  was  of  even  date  might  be  desirable  to  the  holder 
—  as  where  it  were  proved  that  at  a  certain  time  after  date 
of  the  paper  he  had  notice  of  a  defect  which  would  prevent 
his  better  title,  if  it  were  not  then  established. 

§  242.  Rule  as  to  accommodation  paper  acquired  overdue. — 
While  it  is  the  general  rule  that  if  the  paper  be  overdue 
at  the  time  of  the  transfer  that  circumstance  of  itself  is 
notice,  and  he  can  acquire  no  better  title  than  his  indorser; 
yet,  the  fact  that  the  i)aper  was  executed  for  accommoda- 
tion without  consideration,  and  that  the  indorsee  knew  it, 
is  no  defense  even  when  the  paper  was  overdue  at  the  time 
of  the  indorsement,  it  being  considered  that  parties  to  ac- 
commodation paper  hold  themselves  out  to  the  public  by 
their  signatures  to  be  bound  to  every  person  who  shall  take 
the  same  for  value,  to  the  same  extent  as  if  paid  to  him  per- 
sonally.^^ If  the  holder  received  the  pa])er  after  maturity 
from  an  indorser  who  took  it  bona  fide  before  maturity, 
there  is  no  question  as  to  his  right  to  recover;"^"  but  if  he 
takes  it  after  maturity  from  the  party  for  whose  accommoda- 
tion it  was  made,  indorsed,  or  accepted,  there  is  conflict  of 
decision  ou  the  subject  ;'^'^  but  the  doctrine  of  the  text  is 
sustniiHMl   liy  the  highest   authority.^* 

§  243.  Rule  when  instalment  of  principal  or  interest  is 
overdue. —  If  the  note  be  payable  by  instalments  it  is  dis- 
honored when  the  first  instalment  becomes  overdue  and  un- 
paid, and  he  who  takes  it  afterward  takes  it  subject  to  all 
equities  between  the  original  parties.^^  WHiether  or  not  the 
same  rule  applies  when  there  is  an  instalment  of  interest 

31  Story  on  Notes,  §  104;  Duuii  v.  Weston.  71  Me.  270;  Davis  v. 
Miller,   14  Gratt.  6. 

32  Howell  V.  Crane,  12  La.  Ann.  12();  Riegel  v.  Cunninfrliani.  0  Phila. 
177;  ante,  §  201. 

33  Chester  v.  Dorr.  41  N.  Y.  27fl;   Simons  v.  Morris.  ,5.3  Mich.   155. 

34  Daniel  on  Negotiable  Instnunents.  §  720.  and  cases  eited. 

35  Vinton  V.  Kinp.  4  Allen,  5G2;  Field  v.  Tibbetts,  57  Me.  359;  Hart 
V.  Sticknev.  41   Wis.  630. 


154  KKiUTS     OF    A    BONA    FIDE     HOLDER.         §§244,245. 

overdue  and  uiii)aid  is  a  controverted  matter.  The  weight 
of  authority  is  to  the  eifect  that  the  bona  fide  purchaser 
for  vahie  of  negotiable  paper  is  within  the  protection  of  the 
hiw  niercliant  although  interest  is  overdue  and  unpaid  at 
the  tiniG  of  the  purchase,  interest  being  a  mere  incident  of 
the  debt,  and  the  holder  losing  no  right  as  against  the 
parties,  whether  makers  or  indorsers,  by  failure  to  demand 
it.^**  This  seems  to  be  the  correct  rule,  though  the  contrary 
view  is  not  without  some  weighty  considerations  to  support 
it."^'  Where  more  than  one  note  is  executed  upon  the  same 
consideration,  they  are  not  all  to  be  regarded  as  dishonored 
when  one  is  overdue  and  unpaid.^^ 

§  244.  Transfer  on  last  day  of  grace. —  A  purchaser  of  a 
negotiable  instrument,  before  the  close  of  business  hours, 
on  the  last  day  of  grace,  and  before  its  dishonor,  has  been 
held,  and,  as  we  tliink,  correctly,  to  be  fully  protected  as 
having  received  it  while  current;^'*  but  a  contrary  view  has 
been  taken  in  Massachusetts.'*'^ 

§  245.  "  Purchaser  without  notice." —  The  holder  must 
have  acquired  the  paper  without  notice  of  its  dishonor. 
Sometimes  a  bill  payable  at  so  many  days  after  sight,  or 
after  a  certain  event,  is  presented  for  acceptance,  and  dis- 
honored before  the  time  of  payment  by  nonacceptance ;  and 
in  such  cases,  the  party  acquiring  it  with  notice  of  such  dis- 
honor stands  upon  the  same  footing  as  one  who  acquires  it 
after  maturity,  and  is  chargeable  in  like  manner  \vith  con- 
structive notice  of  any  flaw  in  the  right  or  title  of  his  trans- 
ferrer.^^ Sometimes  the  instrument  bears  upon  its  face  the 
marks  of  its  dishonor  for  nonacceptance,  and  in  such  cases 
it  bears,  as  has  been  said,  "  a  death  wound  apparent  on  it."  ^^ 


■ifi  National    Bank    v.    Kirby,    108   Mass.    497;    Kelley   v.   Whitney.   45 
Wis.  110. 

37  Newell  V.  GrefT}?.  51   Barb.  263. 

•'58  Boss  V.  Hewitt,  15  Wis.  260;   Patterson  v.  Wri<?ht.  64  Wis.  291. 

•■K»Fox  V.   Bank.  .30  Kan.  442;   Bosch  v.  Gassing,  64  Iowa,  314. 

40  Pine  V.   Smith,   11   Gray,  38. 

41  Crossly  v.   Ham,    13   East,    498. 

42  Goodman  v.   Harvey,  4  Ad.   &  EI.  870;   Byles  on  Bills    [*160],  283. 


§240.        WHAT     COXSTITl'TKS    A     IJO.NA     lIltK     1 1 0  I.I  iKi;.  !.'*."> 

If  it  has  been  disliunored  for  nonpayment  wlien  paval.lc  on 
doniancl  or  at  sight,  the  like  rule  applies;  but  it  is  only  when 
the  bill  or  note  is  payable  at  a  day  eertain  that  the  i)iirehaser 
can  perceive,  by  the  very  fact  that  it  is  overdue,  that  it  has 
been  dishonored.  The  United  States  Supreme  Court  has 
observed  on  this  subject  that  ''  a  i)erson  who  takes  a  bill 
which,  upon  the  face  of  it,  was  dishonored,  cannot  be  allowed 
to  claim  the  ])rivi leges  which  belong  to  a  bond  fide  holder. 
If  he  chooses  to  receive  it  under  the  circumstances,  he  takes 
it  with  all  the  infirmities  belonging  to  it,  and  is  in  no  better 
condition  than  the  person  from  whom  he  received  it.''  ^" 

§246.  Notice  of  fraud,  defect  of  title,  and  illegality. —  Jn 
order  to  stand  n])on  a  better  footing  than  his  transferrer, 
the  holder  must  ae<[uire  the  instrument  without  notice  of 
fraud,  defect  of  title,  illegality  of  consideration,  or  other 
fact  which  impeaches  its  validity  in  his  transferrer's  hands; 
and  the  word  notice  in  this  connection  signifies  the  same  as 
knowledge.  Knowledge  of  fraud  or  illegality  impeaches  the 
bona  fidcfi  of  the  holder,  or  at  least  destroys  the  superiority 
of  his  title,  and  leaves  him  in  the  shoes  of  the  transferrer.'*^ 
And  any  fraud  uj)on  the  transferrer  incapacitates  the  trans- 
feree or  one  acquiring  from  him  with  notice  from  recover- 
ing against  the  transferrer.'*^ 

§  247.  Time  of  notice. —  The  notice  affecting  the  holder 
must  exist  at  the  time  he  acquires  the  paper,  for  then  his 
relation  to  it  is  fLxed;  and.  subsequent  notice  does  not  affect 
his  title  or  right  to  transfer  it.*''  If  notice  of  fraud  be 
communicated  to  the  holder  before  he  pays  for  the  paper, 
although  the  contract  has  been  entered  into,  he  cannot  stand 
upon  the  footing  of  a  boiia  fde  holder  without  notice,"*'  and 
if  he  has  paid  a  part  of  the  amount  agreed  upon  when  he 

43  Andrews  v.  Pond,  1.3  Pet.  6.5;  Anjrle  v.  Insinance  Co..  92  V.  S. 
341;  District  of  Columbia  v.  Cornell,  1.30  U.  S.  601. 

44Hanauer  v.  Doane.  12  Wall.  .342;  Crampton  v.  Perkins.  0.')  Md.  24: 
Mace  V.  Kennedy.  (58  Mich.  380. 

4''.  Lenheim  v.  Fay,  27  Mich.  70. 

46  Perkins  v.  White.  36  Ohio  St.  .'>.30. 

47Crandell  v.  Vickery,  45  Barb.  150;  Davis  v.  Wait.  12  Oreg.  42.5. 


156  EIGHTS    OF    A    BONA    FIDE    IIOLDEK,  §  248. 

receives  notice  of  fraud,  he  will  only  be  protected  to  that 
extent,  and  no  more."***  Actual  notice  of  the  defect  is  not 
required,  where  the  evidence  of  the  infiniiity  consists  of 
matters  apparent  on  the  face  of  the  instrument.^^ 

§  248.  Notice  of  accommodation  paper. —  It  is  to  be  ob- 
served, however,  that  knowledge  of  the  mere  want  of  con- 
sideration as  between  the  original  parties  will  not  alone  pre- 
vent the  purchaser  from  becoming  a  bona  fide  holder  and 
occupying  a  better  position  than  his  transferrer.  Accommo- 
dation paper  is  daily  placed  in  market  for  discount  or  sale, 
and  an  indorsee  or  purchaser  who  knows  that  a  bill  or  note 
still  current  was  drawn,  made,  accepted,  or  indorsed  without 
consideration  is  as  much  entitled  to  recover  as  if  he  had 
been  ignorant  of  the  fact,^°  and  even  Avhere  he  acquires  it 
overdue. ^^  Xor  is  it  a  good  ground  of  defense  against  a 
ho7ia  fide  holder  for  value  that  he  was  informed  that  the 
note  was  made  or  the  bill  accepted  in  consideration  of  an 
executory  contract,  unless  he  w'as  also  informed  of  its 
breach. ^^  If  he  has  such  knowledge  he  cannot  recover.^^ 
And  if  anyone  purchase  accommodation  paper  wdth  knowl- 
edge that  the  tenus  and  conditions  on  which  the  accommo- 
dation was  given  have  been  violated,  he  is  not  a  hona  fide 
holder  as  against  the  party  who  lent  his  name  for  accommo- 
dation.^^ The  defense  must  not  only  show  that  the  paper 
w^as  diverted  from  its  purpose,  but  also  that  such  diversion 


48  Dresser  v.  M.  &  I.  R.  Co.,  93  U.  S.  93;  Wearer  v.  Barden,  49  N.  Y. 
286. 

49  Posf,  §  251. 

50  Thatcher  v.  West  River  Nat.  Bank,  19  Mich.  202;  Stephens  v. 
Monongahela  Xat.  Bank,  87  Pa.  St.  163;  Powell  v.  Waters,  17  Johns. 
176. 

51  Ante,  §  205. 

52  Patten  v.  Gleason,  106  Mass.  439;  Bank  v.  Cason,  39  La.  Ann. 
867. 

53  Wagner  v.  Diedrieh,  50  Mo.  484;  Bonman  v.  Van  Kuren,  29  Wis. 
218. 

54  Buchanan  v.  Findley,  9  B.  &  C.  738;  Daggett  v.  Whiting,  35  Conn. 
372. 


§  249.        WHAT    CONSTITUTES    A    BONA    1  IDK    HOLDER.  157 

was  known  to  the  holder  when  he  received  it,  misapplica- 
tion not  being  such  fraud  as  shifts  the  burden  of  proof.*"^ 
The  rule  in  New  York  is  different,  and  there  it  is  held 
that  a  diversion  is  such  fraud  as  shifts  the  burden  of  proof 
upon  the  holder.^" 

§  249.  What  amounts  to  diversion  of  accommodation  paper. 
—  It  is  inmuilerial  that  paper  executed  or  indorsed  for 
accommodation  is  not  used  in  precise  conformity  with  agree- 
ment, when  it  does  not  appear  that  the  acconmiodation 
party  had  any  interest  in  the  manner  in  which  the  paper  was 
to  be  applied.  No  change  in  the  mere  mode  <>r  ])lan  of  rais- 
ing the  money,  though  not  ap])liod  to  the  puqwse  intended 
by  the  accommodation  party,  will  constitute  a  misappropria- 
tion. In  order  to  constitute  a  misappropriation,  there  must 
be  a  fraudulent  diversion  from  the  original  object  and  de- 
sign; and  it  is  now  well  settled  that  where  a  note  is  indorsed 
for  the  accommodation  of  the  maker,  to  be  discounted  at 
a  particular  bank,  it  is  no  fraudulent  misappropriation  of 
the  note,  if  it  is  discounted  at  another  bank  or  used  in  the 
payment  of  a  debt  or  otherwise  for  the  credit  of  the  maker. ^^ 
If  the  note  has  effected  the  substantial  puii^ose  for  which 
it  was  designed  by  the  parties,  an  accommodation  maker  or 
indorser  cannot  object  that  the  accommodation  was  not 
effected  in  the  precise  manner  contemplated,  where  there  is 
no  fraud,  and  the  interest  of  the  indorser  is  not  prejudiced.^® 

§  250.  Express  notice. —  It  is  quite  certain  that  if  the 
notice  or  knowledge  of  the  transferrer's  defective  title  be 
express,  it  will  destroy  the  purchaser's  better  position;  for 
if  he  is  actually  informed  of  the  intiniiity  —  as  when  he  is 
told  by  the  maker  that  it  is  without  consideration,  and  that 
it  will  not  be  paid  —  he  (n-rs  willingly  if  he  perseveres  in 

55  Stoddard  v.  Kimball,  G  Cush.  469;  Clark  v.  Thayer,  105  Mass.  216; 
Gray  v.  Bank  of  Kentucky,  29  Pa.  St.  365. 

56  Farmers  and  Citizens'  Nat.  Bank  v.  Noxon,  45  X.  Y.  762. 

57  Frank  v.  Quast.  8(1  Ky.  ().")2 ;  Morris  v.  Morton.  14  Nebr.  360. 

5S  Duncan  &  Sherman  v.  Gilbert.  29  X.  .T.  L.  521;  Briggs  v.  Boyd, 
37  Vt.  538;  Wardell  v.  Howell.  9  Wend.  170. 


158  EIGHTS    OF    A    BO^'A    FIDE    HOLDER.  §  251. 

negotiating  for  the  paper,  and  has  no  claim  whatever  for 
peculiar  protection.^*'' 

§  251.  Implied  or  constructive  notice  from  appearance  of 
the  paper. —  Expre^s  notice  is  not  indispensable.  There  may 
be  evidence  of  the  infirmity  in  the  paper  apparent  on  its 
face,  or  such  indications  as  to  put  the  purchaser  upon  in- 
quiry. And  in  such  cases  constructive  notice  is  held  suffi- 
cient upon  the  ground  that  when  a  party  is  about  to  perfonn 
an  act  which  he  has  reason  to  believe  may  affect  the  rights 
of  third  persons  an  inquiry  as  to  the  facts  is  a  moral  duty, 
and  diligence  an  act  of  justice.^^  In  Connecticut  the  un- 
usual character  of  the  instiiiment  —  its  being  written  on 
tracing  paper,  coupled  Avith  suspicious  circumstances  in  the 
negotiation  —  was  held  to  authorize  inquiry  of  a  broker 
"  whether  a  banker  or  a  broker  would  discount  a  note  of 
that  character  mthout  a  A\411fnl  failure  to  inquire  into  the 
circumstances  under  which  it  was  obtained,"  with  a  view 
to  impeaching  the  good  faith  of  the  transaction.^^  And  so 
in  New  York,  an  unsig-ned  blank  left  for  sig-nature  was  held 
to  affect  the  purchaser  with  notice  of  the  defect.*'^  A  line 
dra-\\Ti  over  the  Avords  "  or  order "  and  a  memorandum 
written  on  the  paper,  "  this  note  is  not  negotiable,"  would 
of  course  notify  the  purchaser.*^^ 

In  Maryland  the  doctrine  of  notice  was  applied  to  the 
case  of  a  note  payable  to  a  certain  person  as  ''  Trustee," 
and  indorsed  in  the  same  style  by  the  trustee,  who  sold  the 
note  and  appropriated  the  proceeds;  and  the  court  held 
that  the  word  "  trustee  "  put  the  purchaser  upon  inquiry, 
and  that  he  could  not  trace  title  as  against  the  maker 
through  such  an  indorsement,  as  the  trustee  had  no  power 
to  dispose  of  the  trust  subject  for  his  own  benefit.*'^ 

59  Xorvill  V.  Hudgins,  4  Munf.  496 ;  Gilman  v.  New  Orleans  R.  Co., 
72  Ala.  581. 

60  Davis  Machine  Co.  v.  Best,  105  N.  Y.  .59 ;  Hamilton  v.  Wilson,  67 
Ga.  498;   Angle  v.  Insurance  Co.,  92  U.  S.  342. 

61  Rowland  v.  Fowler.  47  Conn.  347. 

62  Davis  Machine  Co.  v.  Best,  105  N.  Y.  59. 

fi".  Prins  V.  So.  Branch  Lumber  Co.,  20  Til.  App.  236. 
G4  Third  Nat.   Bank  v.  Lange,  51  Md.   138. 


g  252.        WHAT    CON.STITUTKS    A    BONA    l-IUE    HOLDER. 


:,\) 


§  252.  Constructive  notice  from  extrinsic  circumstances. — 
Tho  cireunistaiu'es  of  the  transaction  may  l)e  of  such  a  char- 
acter as  to  intimate  strongly  a  defect  in  the  title,  and  if 
they  are  such  as  to  invite  inquiry  they  \vill  suffice,  provided 
tho  jury  think  that  abstinence  from  inquiry  arose  from  a 
belief  or  suspicion  that  inquiiy  would  disclose  a  vice  in  the 
paper. ^'•'■'  Then  indeed  his  bona  fides  woidd  be  impeached. 
But  further  than  this,  gross  negligence,  which  is  not  in  itself 
proof  of  mala  fides,  may  be  so  great  as  to  amount  to  proof 
of  notice.  "  I  agree,"  says  Baron  Parke,  "  that  notice  and 
knowledge  mean  not  merely  express  notice,  but  knowledge 
or  the  means  of  knowledge  to  which  the  party  willfully  shuts 
his  eyes."  ^^ 

§  253.  Particular  and  general  notice. —  It  is  quite  clear  and 
well-settled  that  the  purchaser  need  not  have  notice  of  the 
particular  fraud,  or  ecpiity  or  illegality,  in  order  to  be  af- 
fected by  it.  It  is  sufficient  that  there  be  notice,  actual  or 
constructive,  that  there  is  some  fraud,  or  equity  or  illegality 
affecting  the  original  parties.  "  Thus,  if  wdien  he  took  the 
bill  he  w^ere  told  in  express  terms  that  there  w^as  something 
wrong  about  it,  without  being  told  what  the  vice  was,  or  if 
it  can  be  collected  by  a  jnry,  from  circumstances  fairly  war- 
ranting such  an  inference  that  he  knew,  or  believed,  or 
thought  that  the  bill  was  tainted  with  illegality  or  fraud, 
such  a  general  or  implicit  notice  ^\'ill  equally  destroy  the 
title."  *'^  So  if  he  knows  that  the  maker  denies  his  liability 
or  refuses  to  acknowledge  it.*"'' 

§  254.  Circumstances  constituting  notice. — Xotice  of  fraud, 
or  defect  of  title,  or  of  defense  valid  between  prior  parties 
may  be  derived  from  circumstances,  and  be  as  effectual  as 
personal  observation,  or  hearing  of  the  facts  in  question. 

C5  Hulbert  v.  Douglass,  94  N.  C.  122;  Bank  of  Hamburg  v.  Flynn,  38 
Fed.  798;   Ormsbee  v.  Howe,  54  Vt.  182. 

cfiMay  V.  Chapman.  10  M.  &  W.  3,55. 

orRylos  on  Bills  [*lini,  220;  Oakley  v.  Ooddeen.  2  F.  &  F.  tl.lQ; 
Henry  v.  Sneed.  90  Mo.  422. 

68Boyco  V.  Geyer,  2  Mich.  N.  P.  71;  Studebaker  v.  Manufacturing 
Co.,  70  Mo.  274. 


100  EIGHTS    OF    A    BONA    FIDE    HOLDER.  §  255. 

Thus,  where  the  assignee  of  a  note,  at  the  time  of  assign- 
ment, requests  and  receives,  as  security  from  the  transferrer, 
a  conveyance  of  hind  for  the  purchase  money  of  which  the 
note  is  given,  with  a  provision  in  the  deed  that  the  assignee 
is  to  comply  with  the  tenns  of  the  contract  of  sale  to  the 
prior  purchaser,  the  assig-nee  will  be  chargeable  with  notice 
of  the  character  of  the  note.^"®  Mere  proof  of  an  advertise- 
ment in  a  newspaper  cautioning  parties  against  purchasing 
a  bill  or  note,  even  when  made  in  the  place  of  residence  of 
the  purchaser,  is  not  of  itself  sufficient  to  show  notice  to 
the  purchaser  of  any  fraud  affecting  its  validity.'^" 

§  255.  Notice  to  agent. — It  is  a  general  principle  of  law 
that  notice  to  an  agent  is  notice  to  the  principal,  and  there- 
fore if  the  holder   in  taking   the   bill   employs   an  agent, 
though  he  be  unaffected  with  notice  to  himself  personally, 
yet  notice  to  the  agent  so  employed,  express  or  implied,  is 
notice  to  the  holder.'^^     And  notice  to  a   subagent  whose 
appointment  has  been  authorized  by  the  principal  is  equally 
notice  to  the  principal.'^-     But  this  rule  is  subject  to  the 
qualification  that  the  knowledge  of  the  agent,  in  order  to 
affect  his  principal,  should  either  have  been  acquired  in  the 
same  transaction,  or  at  least  so  recently  as  that  it  may  be 
presumed  to  have  remained  in  his  memory;  and  it  must  be 
knowledge  of  a  fact  material  to  the  transaction,  and  which 
it  Avould  be  the  duty  of  the  agent  to  communicate  to  his 
principal.'^    That  the  principal  is  bound  by  such  knoAvledge 
or  notice  as  his  agent  obtains  in  negotiating  the  particular 
transaction  is  everywhere  conceded.     Constructive  notice  to 
an  agent  is  not  to  be  extended.''^'*    Notice  to  the  active  man- 
aging officers  of  a  corporation  is  notice  to  the  corporation 
itself.     It  is  immaterial  what  the  official  position  may  be  if 

60  Packwood  v.  Gridloy,  39  111.  383. 
"0  Kellogg  V.  French,  14  Gray,  3.54. 

71  Story  on  Agency,  §  140;  Varnum  v.  Milford,  4  McLean,  93;  Henry 
V.  Sneed,  99  Mo.  423. 

72  Boyd  V.  Vandorkcmp,  1  Barb.  Ch.  273. 

73  The  Distilled  Spirits.   11   Wall.  366;   Le  Neve  v.  Le  Neve,  2  Lead. 
Cas.  in  Eq.  179. 

74Wyllie  v.  Pollen,  32  L.  J.  Ch.  782. 


g  255.        WHAT    CONSTITUTES    A    JJONA     FIDK     llOl-DKU.  KJl 

the  i)orsoii  is  actively  engaged  in  the  management  of  its 
interests.'"'''  The  mere  fact,  however,  that  the  cashier  of  a 
bank  is  a  stockhoMer  and  director  of  a  coiimration  which  is 
the  payee  and  inddrser  of  a  note,  will  not  charge  the  hank 
Avith  notice  of  ecjuities  against  tlu^  cor])oration,  when  it  ap- 
pears that  the  cashier  has  no  (hities  to  ])erform  with  refer- 
ence to  the  note  as  director  of  the  coinpaiiy,  and  no  actual 
notice  of  such  ecpiities.""  Notice  to,  or  knowledge  of,  one 
member  of  a  partnership  is  notice  to  all  of  its  members." 

75  National  Bank  v.  Howe,  40  Minn.  390;  New  England  Mortgage  Co. 
V.  Gay,  33  Fed.  630. 

76  First  Nat.  Bank  v.  Loyhod,  '28  Minn.  390;   Wilson  v.  Second  Nat. 
Bank,  0  Cent.  750. 

"7  Bigelow  V.  Henringor,  33  Kan.  302. 

11 


BOOK  IV. 

FIXING  LIABILITY  TO  PAY   THE  INSTRUMENT. 


CHAPTEli   X. 

PRESENTflENT  FOR  ACCEPTANCE,  AND  ACCEPTANCE. 


SECTION  I. 


WHAT    BILLS    OF    EXCHANGE    SHOULD  BE    PRESENTED    FOE    AC- 
CEPTANCE. 

§  256.  General  principles. — The  subject-matter  of  tins 
chapter  applies  only  to  bills  of  exchange,  foreign  and  inland. 
The  law  of  presentment  for  acceptance  and  of  acceptance  can 
have  no  application  to  a  negotiable  contract,  where,  from 
its  nature,  there  is  or  can  be  no  acceptor.  The  certification 
of  checks,  however,  is  closely  allied  to  the  subject  of  present- 
ment for  acceptance,  and  acceptance.  This  subject  has  been 
fully  treated  in  a  preceding  chapter.^  It  is  the  right 
of  the  holder  of  a  bill  to  present  it  for,  and  insist  on  its, 
acceptance,  even  so  late  as  the  day  before  it  falls  due.  If 
not  presented  for  acceptance  until  the  day  it  falls  due,  the 
right  to  demand  acceptance  becomes  merged  in  the  right  to 
demand  payment.  If  the  bill  be  presented  for  acceptance 
before  it  falls  due,  it  becomes  dishonored  if  acceptance  be 
refused;  and  notice  must  be  forthwith  given  to  the  parties 
whom  it  is  intended  to  charge.  And  suit  may  at  once  be 
instituted  against  the  drawer,   and  against  the  indorsers.^ 

1  Ante,  §§  .3,5-38. 

2  TowTisley  v.  Rumrall,  2  Pet.  170;  Landniin  v.  Trowbridge,  2  Mete. 
(Ky.)  281;  National  Bank  v.  Gunlioiise,  17  S.  C.  496;  Woodward  v. 
Row,  Keb.  132. 

[162] 


g  257.  HILLS    KKQUIKIN'G    I'KKSEXTMENT. 


103 


This  rule  of  c'<nuineivial  law  is  so  general  and  binding-  that 
a  statute  of  a  State  which  forbids  a  suit  from  being  l.rought 
in  such  a  ease  until  after  the  maturity  of  the  bill,  can  have 
no  effect  u])«)n  suits  brought  iu  the  TnitcMl  States  courts. 
The  requisition  of  a  State  statute  like  this  would  be  a  vio- 
lation of  the  geueral  eonunercial  law,  which  a  State  has  no 
power  to  iiiii)o>e,  nml  wliicli  the  courts  of  the  United  States 
Avould  be  bound  to  disregard.  So  also  if  the  State  statute 
seeks  to  make  the  right  of  recovery,  in  a  suit  brought  in 
case  of  nonacceptance,  dependent  upon  proof  of  subsequent 
presentuieiit,   ]u-otest,   and   notice  for   nonpayment.^ 

§  257.  What  bills  must  be  presented  for  acceptance. —  Bills 
payable  on  demand  or  at  sight  without  grace  (which  are  im- 
mediately payable  on  presentment),  or  payable  at  a  certain 
number  of  days  after  date,  or  after  any  other  certain  event, 
or  payable  on  a  day  certain,  need  not  be  presented,  for 
acceptance  at  all,  but  only  for  payment.  And  the  fact  that 
such  bills  are  i)ayable  at  a  bank,  or  other  particular  place, 
does  not  alter  the  rule  on  the  subject.'*  But  it  is  usual  and 
best,  when  the  bill  is  payable  at  a  future  day,  to  present  it 
for  acceptance,  in  order  to  ascertain  whether  it  will  cer- 
tainly be  honored,  and  to  procure  the  assurance  of  the  ac- 
ceptor's liability.^  And  in  such  cases,  if  acceptance  be  re- 
fused, the  holder  must  make  protest,  and  give  notice  in  the 
same  manner  as  if  the  bill  were  payable  at  so  many  days 
after  sight.*'  There  are,  however,  three  exceptions  to  this 
general  rule  that  it  is  not  necessary  to  present  a  bill  payable 
at  a  fixed  time  for  acceptance,  but  only  at  maturity  for  pay- 
ment: First,  when  there  is  an  express  direction  to  the 
payee  or  holder  of  a  bill ;  second,  when  it  is  put  into  the 
hands  of  an  agent  for  negotiation;  and,  third,  where  the 
drawer  and  drawee  are  either  the  same  person,  or  the  drawer 
is  a  member  of  the  firm  or  connected  with  the  corporation 

3  Watson  V.  Tarpley,    18  How.   517. 

•iBank  of  Washin<,'ton  v.  Triplott,  1   Pet.  25:   Townley  v.  Sunirall.  2 
Pet.  170. 

5  United  States  v.  Barker.  4  Wash.  C.  C.  464;    Story  on  Bills.  S  288. 

6  Allen  V.  Suydam,  20  Wend.   321;   Landrum  v.  Trowbridge.  2  Mete, 
(Ky.)    281:  Philpott   v.  Bryant,  3  Car.  &   P.    244. 


1()4:  PKESKXTMEXT    FOK    ACCEl'TA.NCK.  §  258. 

M-hicli  is  tlie  drawrc.  Thus,  a  hill  drawn  without  hcing  ad- 
dressed to  any  drawee,  or  drawn  by  a  jiarty  upon  himself, 
or  by  a  partner  upon  the  finn  of  wliieli  he  is  a  member,  for 
partnership  purposes.  A  bill  drawn  by  the  president  of  a 
corporation  in  its  behalf,  on  the  treasurer  thereof,  would  be 
a  bill  drawn  by  the  corporation  on  itself,  and  hence  not 
need  acceptance.' 

Bills  payable  at  sight,  or  at  so  many  days  after  sight,  or 
after  demand,  or  after  any  other  event  not  absolutely  fixed, 
must  be  presented  to  the  drawee  for  acceptance  and  pay- 
ment, or  for  acceptance  only,  without  unreasonable  delay,  or 
the  drawer  and  indorsers  will  be  discharged,  for  they  have 
an  interest  in  having  the  bills  accepted  immediately  in  order 
to  shorten  the  time  of  payment,  and  thus  put  a  limit  to  the 
period  of  their  liability;  and  also  enable  them  to  protect 
themselves  by  other  means  before  it  is  too  late,  if  the  bill  is 
not  accepted  and  paid  A^dthin  the  time  originally  contem- 
plated by  them.*  When  the  words  "  acceptance  waived  " 
are  embodied  in  a  l^ill,  the  ordinary  proceedings  in  accept- 
ance are  dispensed  \v\t\\,  and  merged  into  those  of  payment 
or  nonpayment.^ 

§  258.  When  drawer  of  bill  requiring  presentment  for  ac- 
ceptance bound  without  such  presentment. —  Presentment  to 
the  drawee,  it  has  been  held,  is  necessary,  even  though  the 
drawer  has  requested  him  not  to  accept  ;^^  but  the  holder  is 
not  bound  to  present  again  after  refusal  to  accept  and  notice 
given,  even  though  the  drawer  requests  him  to  do  so,  and 
promises  that  the  bill  shall  be  honored.^^ 

The  only  cases  in  which  the  holder  of  a  bill  which,  ac- 
cording to  its  tenor,  should  be  presented  for  acceptance,  can 
charge   the   drawer   without   presenting   it   for    acceptance, 

7  Daniel  on  Xegotiable  Instruments,  §  465. 

8  Bell  V.  First  Nat.  Bank,  U5  U.  S.  379;  Milfholl  v.  De  Grand,  1 
Mason,  176;  Robinson  v.  Ames,  20  Johns.  146. 

9  Carson  v.  Russell,  20  Tex.  472;  Ens^^lisli  v.  Wall,  12  Rob.  (La.)  1.12; 
Webb  V.  Mears,  9  Wrif^ht,  222. 

10  Hill  V.  Heap,  Dowl.  &  R.  N".  P.  .57;  1  Parsons  on  Notes  and  Bills, 
388. 

11  Hickligg  V.  Hardey,  7  Taunt.  .312. 


§  251).        iJY  AM)  TO   WHOM    im;i:si;nt.\ii:.\1'   madk.  1<»-"> 

anso  when  the.  relations  betwcon  thf  drawer  and  drawee 
are  sncli  as  to  constitute  l!ie  drawinii-  of  the  ])ill  a  fraud 
upon  the  holder.'-  When  tlie  hill  is  presented  the  accept- 
ance must  ])e  according:  to  its  tenor  to  pay  in  money.  If  it 
be  to  pay  hy  aiK.tlicr  hill,  it  is  no  acceptance,  and  the;  hill 
slioidd   he  ])rotestcd.''' 

sEcnox  Ti.  ■  ■ 

BV    AND  TO    WHOM    PRESENTMENT    SHOULD   BE   MADE. 

§259.  By  and  to  whom;  general  rule. —  The  bill  must  be 
presented  hy  the  holder  or  his  authorized  a^ent,  and  to  the 
drawee  or  his  authonzed  agent.  'Jdie  party  in  possession 
of  the  hill  is  with  ostensihle  legal  title  thereto,  presmned 
to  bo  the  holder,  and  to  have  the  right  to  make  presentment 
for  acceptance  or  payment.'"'  The  drawee  may  accept  with- 
out risk,  and  if  he  refuse,  the  protest  vn.\\  inure  to  the  bene- 
fit of  the  nghtful  holder.'^  If  the  drawee  cannot  be  found, 
and  any  person  has  been  indicated  to  be  resorted  to  in 
case  of  need  (an  hesoin),  the  bill  should  be  presented  to  that 
person."' 

If  the  bill  be  drawn  upon  two  persons  not  partners,  it 
seems  that  it  must  be  presented  to  both,  if  not  paid  by  the 
first;'"  but  this  luis  hoon  doubted,  for  the  reason  that  the 
holder  would  not  he  hound  to  take  the  single  acceptance  of 
the  other;  and  if  he  did,  it  would  be  at  his  ovm  risk,  if  the 
bill  Avere  not  protested.'**  But  if  the  bill  be  drawn  upon  a 
firm,  presentment  to  any  partner  is  sufficient,'^  and  the  fact 

12  Bank  of  Wasliington  v.  Triplett,  1  Pet.  25;  Smith's  Mercantile 
Law    (Holeonilw  &  Cholson's  ed.),  304. 

13  Russell  V.  Phillips,  14  Q.  H.  891. 

l-t  Bank   of   Utica  v.   Sniitli.    18  Johns.   230;   Freeman  v.   Bovntoti,   7 
Mass.  483;  Apnew  v.  Bank  of  Gettysbnrp.  2  Harr.  4  Gill,  478. 
ir>Chitty  on  Bills    (13th  Am.  ed.).  311. 
ifi  Story  on  Bills,  §  229 ;  Edwards  on  Bills,  402. 

17  Willis  V.  Green,  5  Hill,  232;  Story  on  Bills,  §  229. 

18  Story  on  Bills.  §  220,  note  0.  Soo  Harris  v.  Clark.  10  Ohio.  5; 
Greenouph  v.  Smead,  3  Ohio  St.  415. 

lOGreatlake  v.  Brown,  2  C'ranc-h  C.  C.  541;  Holt/,  v.  Boppe,  37  N.  Y. 
634. 


16G  l'KESE>CT.Mi;.N  r     lOli    AOCEPTAXCE.        §<^   ^(JO,  iJU  1  . 

that   the  linn  has  been  dissolved   by   bankruptcy   does  not 
render  it  necessary  to  present  tlie  bill  to  both.^' 

^  260.  Presentment  to  agent  of  drawee. —  The  holder  or 
his  agent  must  Ijc  careful,  when  he  does  not  tind  the  drawee 
in  person,  to  assure  himself  that  the  party  to  whom  he 
presents  the  bill  for  acceptance  is  his  authorized  agent. 
And  though  in  the  case  of  a  presentment  for  payment  it 
may  sufHce  to  demand  payment  at  the  residence  of  the 
acceptor,  yet  in  case  of  a  presentment  for  acceptance,  the 
holder  must  endeavor  to  see  the  drawee  or  his  authorized 
agent,  personally.  And,  therefore,  where  in  an  action 
against  the  drawee  on  a  refusal  to  accept,  it  appeared  that 
the  ^^-itness  had  carried  the  bill  to  a  place  which  was  de- 
scribed to  him  as  the  drawee's  house,  and  that  he  offered  it 
to  a  person  in  a  tanyard,  who  refused  to  accept  it;  and  the 
mtness  did  not  know  the  drawee's  person,  nor  could  he  swear 
that  the  person  to  whom  he  offered  the  bill  was  he,  or  repre- 
sented himself  to  be  so,  it  was  held  that  the  evidence  of 
presentment  to  the  drawee  for  acceptance  was  insufficient.*^ 
In  accordance  with  the  principles  stated,  it  may  be  added 
that  there  is  no  doubt  that  a  clerk  found  in  the  drawee's 
counting-room  is  a  competent  person  to  whom  the  bill  can 
be  presented,  and  his  refusal  to  accept  is,  in  law,  the  refusal 
of  the  drawee.^ 

§261.  Presentment    in   case    of    drawee's    death. —  In    the 

event  the  drawee  be  dead  at  the  time  the  bill  should  be 
presented  for  acceptance,  the  most  that  could  be  expected 
of  the  holder  would  be  that  he  should  inquire  after  the 
personal  rei)resentative  of  the  deceased  drawee,  and  if  he 
live  within  a  reasonable  distance,  present  the  bill  to  him. 
Chitty  and  Byles  both  give  their  indorsement  to  this  proposi- 
tion.^ But  some  of  the  best  text-writers,  as  well  as  many 
of  the  cases,  state  that  the  holder  is  not  bound  to  present 

20  Gates  V.  Beechor,  GO  N.  Y.  .523. 

21  Chepk  V.  Roper.  .">  Esp.  17-5. 

22  Daniel   on  Xe«rotiahlp  Instninients,  §  457. 

S.-?  Chitty  on  Bills   [*280],   318;   Byles  on  Bills   |*1771.  303. 


§  2(»2.  WIIEUK,    AM)     1I(J\V,     I'JJKSKNTMKXT     MADK.  107 

the  bill  to  the  executor  or  the  administrator  of  the  drawee."'* 
In  any  event,  the  holder  has  the  right,  and  it  becomes  his 
duty,  to  protest  the  bill  for  nonacceptance,  if  there  be,  at 
the  time  of  presentment,  no  executor  or  administrator  of  the 
deceased  drawee.  It  should  be  observed,  in  this  connection, 
that  an  acceptance  by  the  personal  representative  of  the 
drawee  is  binding  upon  the  representative  individually,  and 
not  in  his  official  character,  and  further,  that  the  holder  is 
not  obliged  to  receive  the  acceptance  of  the  executor  or 
administrator  at  all.  Upon  sound  principle,  therefore,  it 
should  follow  that  if  the  drawee  be  dead,  the  holder 
should  have  the  right,  and  bo  impressed  with  the  duty,  of 
protesting  the  bill  ^\^tll<)Ut  any  ])resentment  to  the  personal 
representative. 

SECTION  ITT. 

THE    PLACE    WHERE,    AND    HOW,    PRESENTMENT    SHOULD    BE 

^rADE. 

§  262.  Sergeant  Onslow's  act. —  It  was  at  one  time  a  ques- 
tion much  litigated  in  England,  whether,  if  a  l>ill  payable 
generally  —  that  is,  without  specification  of  a  place  of  pay- 
ment —  was  accepted  i)ayable  at  a  particular  place,  such 
an  acceptance  was  a  qualified  one.  It  was  decided  in  the 
House  of  Lords  (contrary,  however,  to  the  opinion  of  eight 
of  the  twelve  judges  to  whom  the  question  was  referred), 
that  such  an  acceptance  was  a  qualified  one,  and  that  a  de- 
mand at  the  particular  ])laco  named  was  a  condition  precedent 
to  a  recovery  against  the  acceptor,  as  well  as  against  the 
drawer  and  indorser.^  This  decision  led  to  the  passage  of 
the  statute  of  1  and  2  George  IV.,  chap.  78  (called  Sergeant 
Onslow's  act),  in  wdiicli  it  was  recited  that  the  practice  and 
understanding  of  merchants  had  been  different;  and  enacted 
that  an  acceptance  payable  at  a  particular  place  without 
further  expression,  should  not  be  deemed  a  conditional  ac- 
ceptance ;  but  if  it  were  payable  at  a  specified  place  "  only, 

24  Edwards  on   BUU.  401.  4.">4,  note  '2. 
ST.  Rowe  V.  Vouiit^r,  -2  Bind.  &   15.   105. 


IGS  PRESENTMENT  FOR  ACCEPTANCE,   §§  2(53,  2G4. 

and  not  otherwise,  or  elsewhere,"  it  should  he  deemed  con- 
ditional."'" 

>J  263.  American  statutes  and  decisions  as  to  place  of  pre- 
sentment for  acceptance. —  In  many  of  the  States  of  the 
United  States  the  English  statute  has  been  substantially 
enacted;  and  the  courts,  with  few  exceptions,  have,  inde- 
])endently  of  statute,  followed  the  judgment  of  the  eight 
judges  against  the  House  of  Lords.  Therefore,  by  the 
American  law,  it  is  settled  that  demand  of  payment  at  the 
place  specified  need  not  be  averred  by  the  plaintiff;  but  if 
the  acceptor  was  at  the  place  at  the  time  specified,  and 
ready  to  pay  the  money,  it  was  a  matter  of  defense  to  be 
pleaded  on  his  part;  which  defense,  however,  is  no  bar  to  the 
action,  but  goes  only  in  reduction  of  damages,  and  in  pre- 
vention of  costs.^ 

§  264.  Residence,  or  place  of  business. —  The  presentment 
of  the  bill  or  note  for  acceptance  should  be  at  the  place 
of  the  domicile  of  the  drawee,  whether  it  be  payable  gen- 
erally, or  at  a  particular  place  —  the  place  of  payment  being 
iimnaterial  until  after  acceptance.^^  If  the  drawee  has  re- 
moved liis  residence  from  the  place  to  which  it  is  addressed 
—  or  really  resided  at  a  different  place  —  the  bill  should  be 
presented  at  his  new  or  real  place  of  domicile,  if  the  holder 
can  ascertain  it  by  diligent  inquiries.  If  by  such  inquiries 
the  drawee's  place  of  domicile  cannot  be  ascertained,  or  if 
he  has  absconded,  the  bill  may  be  treated  as  dishonored.^*^ 
If  the  drawee  has  his  dwelling-house  in  one  part  of  the  town 
or  city,  and  his  place  of  business  at  another,  it  may  be  made 
at  either  place;  and  if  the  drawee  resides  in  one  town,  and 
has  his  place  of  business  at  another,  the  holder  may  present 
the  bill  at  either.''*^ 


2«  Daniel   on  Negotiable  Instruments,   §  456. 

27  1  Parsons  on  Notes  and  Bills,  .30.5-.3n  ;  Story  on  Bills,  §§  355-357; 
Edwards  on  Bills,  42(),  428. 

28Chitty  on  Bills   (13th  Am.  ed.),  310. 

29Anderso-n  v.  Drake,  14  .Tolins.  114;  Freeman  v.  Boynton,  7  Mass. 
483. 

30 Story  on  Bills,  §  23G. 


§§  2()rj-l'(;7.  IIMK    ^)l^'     I'KKSK.NTMK.XT.  IGU 

g  265.  How  presentment  for  acceptance  should  be  made. — 
The  holder  of  the  bill  should  li;i\»'  it  in  his  possession,  make 
an  actual  exhibit  of  it  to  tlie  (Irawce,  and  request  its  accejjt- 
ance."'^  "  The  term  presentment  imi)orts  not  a  mere  notice 
of  the  existence  of  a  draft  wlii.  li  the  i>arty  has  in  his 
possession,  but  the  exhibiting'  uf  il  to  the  person  on  whom 
it  is  drawn,  that  he  may  see  the  same,  and  examine  his 
accounts  oi-  correspondence,  and  judge  what  he  shall  do; 
whether  he  shall  accept  the  draft  or  not."  ^^  But  while  it 
is  better  in  all  cases  to  avoid  all  question  by  observance  of 
the  formality  indicated  the  drawer  and  indorsers  may  be 
charged  by  (lue  protest  and  notice  where  the  bill  is  not  thus 
actually  exhibited  to  the  drawee,  but  he  is  enabled  by  seeing 
it  or  otherwise  to  give,  and  does  give,  an  intelligent  response 
to  the  reciiu'st  to  accept  it.^'* 

§  266.  Production  of  bill. —  If  the  holder  does  not  produce 
the  bill,  the  drawee  may  require  him  to  do  so,  and  decline 
accepting,  save  in  the  proper  form  by  writing  his  name  on 
its  face;  and  then  unless  the  holder  produces  it  the  drawer 
cannot  be  charged  with  the  penalties  of  nonacceptance ;  but 
if  the  drawee  makes  no  such  requirement  and  does  what  is 
equivalent  to  acceptance  he  cannot  afterward  refuse  to  be 
held  on  the  ground  that  he  did  not  see  the  bill.^'* 

If  the  holder  leave  the  bill  with  the  acceptor,  and  by  his 
negligence  enable  a  third  party  to  get  possession  of  it,  he 
cannot  hold  the  acceptor  liable  in  an  action  of  trover.^*^ 

SECTTOX  IV. 

TIME  OF  PRESENT:Nn-:XT  FOR  ACCEPTANCE. 

§  267.  Time  of  day  for  presentment  for  acceptance ;  business 
hours. —  And  in  the  first  ])lace:  presentment  for  acceptance 

.11  1   Parsons  on  Notes  and  Bills,  348. 

-2  Fall  Rh-er  Union  Bank  v.  Willanl.  '->  Mete.  (Mass.)  210:  Edwftids 
on  Bills.  .SOo. 

:!.•!  First  Xat.  Bank  v.  TIatoh.  7t>  Mo.  2-2;  Fisher  v.  Beokwith,  10  Vt. 
.31. 

34  Fall  River  Union  Bank  v.  Willard,  .">  Mete.    (Mas3.)   216. 

36  Morrison  v.  Buchanan,  6  Car.  &  P.   18. 


170  I'KKSK.NTMENT  FOK  ACCEPTANCE.         §  2G8. 

should  ill  all  cases  be  made  during  the  usual  hours  of  busi- 
ness, and  siK'h  hours,  except  where  presentment  must  be  at  a 
bank,  generally  range  through  the  whole  day  to  hours  of 
rest  in  the  evening.'^''  Eight  o'clock  in  the  evening  would  not 
be  too  late  to  present  a  bill  for  acceptance  to  a  tradesman.^' 
And  it  matters  not  at  what  hour  it  is  made,  provided  an 
answer  be  given  by  an  authorized  person.^**  But  it  is  a 
mere  nullity  if  made  at  an  unreasonable  hour  —  after  bed- 
time or  business  hours  —  if  no  such  answer  be  given.^^  If 
there  is  a  kno^vn  custom  or  usage  in  a  town  or  city,  which 
regulates  business  hours,  that  should  govern  in  determining 
the  proper  hour  for  presentment  at  the  drawee's  place  of 
business. ■^^ 

§  268.  Within  what  period  of  time  presentment  for  accept- 
ance must  be  made. —  It  seems  to  be  the  general  commercial 
law  of  the  civilized  world,  that  when  a  bill  is  payable  at  a 
day  certain  —  as,  for  instance,  on  a  day  named,  or  a  fixed 
day  after  date  —  it  need  not  be  presented  until  the  day  of 
payment,  in  order  to  charge  the  drawer  or  an  indorser.'*^ 
The  reason  of  this  is  that  the  drawer,  by  fixing  a  day  certain 
for  payment,  assumes  the  responsibility  of  providing  funds 
at  that  time,  wdiatever  may  have  been  his  previous  credit 
with  the  drawee.  And  as  to  the  indorser,  by  the  very  act 
of  indorsement,  he  draws  a  new  bill  on  the  same  terms; 
and,  besides,  he  Avaives  his  right  of  immediate  acceptance  by 
not  enforcing  it  himself,  but  putting  his  bill  into  circulation 
without  acceptance.^  If  payable  at  sight,  or  at  a  certain 
time  after  sight,  or  on  demand,  the  only  rule  which  can  be 
laid  down  is  that  it  must  be  presented  "within  a  reasonable 
time,^^  unless  there  be  some  well-established  usage  of  trade 

3f5E]ford  V.  Teed,  1  Manle  &  S.  28;  Cayuga  County  Bank  v.  Hunt,  2 
Hill,  035. 

37Chitty  on  Bills   [*.313]. 
38Chitty  on  Bills  [*316]. 

39  Story  on  Bills,  §  237. 

40  Story  on  Bills,  §§  2.36,  349;  Story  on  Notes,  §  135. 

41  Town  si  ey  v.  Sumrall,  2  Pet.  178;  Bacliellor  v.  Priest,  12  Pick.  300. 

42  Allen  V.  Suydam,   17  Wend.  308. 

43  Wallace  v.  Agry,  4  Mason,  33G;  Bridgeport  Bank  v.  Dyer,  19  Conn. 
136. 


g  2(J'J.  TIMK    <)1"    I'UESENTMKNT.  ITl 

which  tixes  a  (h'hnitc^  tiiuc  lor  Mich  prc.^enliiicnt,  in  which 
case  such  iisaiic  would  control."*'  If  the  hill  he  not  pre- 
sented witiiin  a  reasonahle  time,  the  drawee  is  discharged, 
although  all  the  ])arties  continue  solvent,  and  there  is  no 
dauiage  caused  ))}'  the  delay/^ 

§269.  Due  diligence  must  be  exercised. —  It  is  not  neces- 
sary l\>r  the  holder  to  take  the  iirst  opportunity  to  present 
for  acceptance,"*"  though  to  avoid  question  in  case  of  loss  it 
is  advisable  to  do  so  —  due  diligence  —  that  is,  presentment 
within  a  reasonable  time,  is  all  that  is  necessary.  "  The 
distinction  is,"  as  was  said  by  Gibbs,  C.  J.,  "•  between  bills 
payable  at  a  certain  number  of  days  after  date,  and  1  tills 
payable  at  a  certain  number  of  days  after  sight.  In  the 
former,  the  holder  is  bound  to  use  all  due  dihgence,  and 
present  the  bill  at  maturity;  but  in  the  latter  case,  he  has 
a  right  to  put  the  bill  into  circulation  before  he  presents  it, 
and  then,  of  course,  it  is  uncertain  when  it  will  be  presented 
to  the  drawee.  It  is  to  the  prejudice  of  the  holder  if  he 
delays  to  do  it,  and  he  loses  his  money  and  interest."  "*' 

There  are  certain  circumstances  which  may  aifect  the 
question  of  reasonable  time;  for  instance:  (1)  The  passing 
of  the  hill  into  circulation.  In  such  case  a  larger  latitude 
is  allowed  for  presentment  for  acceptance,  and  a  long  delay, 
even  for  as  much  as  a  year,  would  not  be  deemed  negli- 
gence. (2)  Fluctuations  of  the  rate  of  exchange.  The  fall- 
ing or  rising  of  the  rate  of  exchange  in  the  place  of  resi- 
dence of  the  drawee  should  be  taken  into  consideration  in 
detennining  whether  or  not  there  was  unreasonable  delay; 
i.  e.,  if  exchange  fell  innnediately  after  the  sale  of  the  bill, 
a  more  extended  period  might  fairly  and  reasonably  be 
allowed  tlio  holder,  in  order  to  enable  him  hnna  fide  to  en- 
deavor to  make  a  fair  profit,  or,  at  all  events,  to  endeavor 

44^rellish  V.  Pvawdnn,  0  Bin?.  416. 

4r>  Carter  v.  Flower.  Ifi  ^L  &  W.  74:?:  Thonihurir  v.  Kmnions.  2.1  >V.  V.i. 
333. 

46Muiliii:in  V.  D'Esuino,  2  TT.  T?l.  ">(')."):  Prescott  Bank  v.  Cavorly.  7 
Gray.  217. 

4"  Goupy  V.  Harden,  7  Taiml.  l.'iO. 


172  ACCEPTANCE.  §§  270,  271. 

to  secure  himself  from  loss,  {o)  The  facilities  of  commu- 
nication between  the  parties.  This  includes  the  character 
of  the  comniimication,  the  distance  between  the  respective 
residences  of  the  holder  and  drawee,  and  the  length  of 
time  necessary  to  effect  communication  between  the  one  place 
and  the  other.  (4)  War,  sickness,  or  accident.  Any  rea- 
sonable cause,  such  as  sickness,  inevitable  accident,  or  in- 
tervention of  war,  or  other  circumstances  beyond  the  hold- 
er's control,  ^^'ill  excuse  delay  in  presentment  for  ac- 
ceptance.'*^ 

SECTION  Y. 

THE  XATUBE  AXD  EFFECT  OF  ACCEPTANCE, 

^  270.  Liability  of  drawer  before  acceptance. —  The  drawer 
of  a  bill  undertakes  that  when  it  is  presented  to  the  drawee 
he  wall  accept  it;  and  by  acceptance  is  meant  an  undertak- 
ing on  the  acceptor's  part  to  pay  the  bill  according  to  its 
tenor.'*'^  Until  the  bill  has  been  accepted,  the  draAver  is  the 
primary  debtor,  and  his  liability  is  contingent  and  condi- 
tioned upon  a  strict  compliance  with  the  law  as  to  present- 
ment of  the  bill  for  acceptance  (if  the  bill  be  of  such  a 
character  that  it  is  necessary  to  present  it  for  acceptance), 
and  due  protest  and  notice  of  dishonor.  After  acceptance, 
the  drawer  becomes  secondarily  liable,  and  his  position  is 
that  of  the  first  indorser  upon  a  promissory  note."*^ 

§  271.  Relation  of  drawee  to  bill  before  acceptance. —  Until 
ho  has  accc])ted  the  bill,  so  entirely  is  the  drawee  a  stranger 
to  it,  that  he  may  himself  discount  it.  And  he  may  then 
transfer  it  as  the  bona  fide  holder  to  another,  who  may  sue 
and  charge  the  drawer.^^  lie  may  discount  it  either  for 
the  drawer,  the  payee,  or  an  indorsee.  "  Tf  the  acceptor 
discounts  the  bill  for  the  drawer,  and  then  indorses  it  away, 
the  drawer  will  1)0  liable  upon  it  to  the  holder,  and  the  trans- 
fer by  the  drawer  to  the  acceptor  will   operate  as  an  in- 

48  Daniel  on  Nof^otiable  Instruments,  §§  468-478. 

49  Story  on  Bills.  §  272:  Cox  v.  National  Bank,  100  U.  S.  712. 
•w  Daniel  on  Xepotiable  Instruments.  §   479. 

r>l  Desha  v.  Stewart,  0  Ala.  8.52:   Swope  v.  Ross.  40  Pa.  St.  ISfi. 


^'21-2.     TiiK  .natii;k  and  EFrKcr  oi-    aix  ki'ta.nck.  \i'> 

dorsemoul,  altli«>u-;li,  at,  tlu;  time,  the  drawer  does  not  intend 
to  transfer  by  way  of  indorsement,  being-  under  the  impres- 
sion that  the  bill  is  discharged  by  coming  into  the  hands  of 
the  acceptor.  .\«>r  will  the  ])ayment  of  the  amount,  less 
the  disoount,  be  deemed  a  payment  of  the  bill  by  the  ac- 
ceptor.'''"'" If  the  drawee  comes  into  possession  of  the  bill 
before  its  dishonor,  there  is  no  i)resumption  that  he  takes  it 
with  the  obligation  to  accept.^' 

^  272.  The  effect  of  the  acceptance  of  a  bill  is  to  consti- 
tute the  acceptor  the  i)rincipal  .lebtor.-'-*  The  bill  becomes 
by  the  acceptance  very  similar  to  a  promissory  note  —  the 
acceptor  being  the  promisor,  and  the  drawer  standing  in 
the  relation  of  an  indorser. 

But  in  respect  to  the  acceptor's  position  ^^•ith  regard  to 
the  drawer,  and  the  amount  for  which  he  renders  himself 
liable  by  accepting  the  bill,  it  is  well  to  observe  that  the 
acceptance  does  not  entitle  the  acceptor  to  charge  it  in  ac- 
count against  the  drawer  from  the  date  of  acceptance,  unless 
he  pays  the  whole  amount  at  the  time,  or  discharges  the 
drawer  from  all  responsibility.^^ 

Like  the  maker  of  a  note,  the  acceptor  is  bound  by  all 
the  terms  of  the  instrument,  and  if  it  contain  a  stipulation 
for  payment  of  attorney's  fees,  he  is  boiind  by  it.°® 

If  the  acceptance  be  for  the  drawer's  accommodation,  the 
acceptor  does  not  thereby  become  entitled  to  sue  the  drawer 
upon  the  bill;  but  Avhen  he  has  paid  the  bill,  and  not  be- 
fore, he  may  recover  back  the  amount  from  the  drawer  in 
an  action  for  money  had  and  received. ^^  If  the  acceptor  put 
the  bill  in  circulation,  he  is  estopped  from  showing  it  was 
then  paid.'^* 

53  Swope  V.  Ross,  40  Pa.  St.  186. 
!■.;{  Desha  v.  Stewart.  0  Ala.  852. 

54  Heurtematte  v.  Morris.  101  N.  Y.  03;  Capital  City  Ins.  Co.  v. 
Quinn,  73  Ala.  5G0. 

nsBracton  v.  Willini;.  4  Call.  288. 

r.<!  Smith  v.  :Muncie  Nat.  Bank,  29  Ind.  158. 

•"  Christian  v.  Keen,  SO  Va.  377  :   Martin  v.  ]\runcy.  40  La.  Ann.  190. 

58Hinton  v.  Bank  of  Columbus.  9  Port.  (Ala.)  463. 


174  ACCEPTANCE.  §§  273,  274. 

§  273.  What  acceptance  admits:  (1)  Signature  of  drawer. — 
It  follows  from  the  fact  that  the  acceptor  assumes  to  pay 
the  bill,  and  becomes  the  principal  debtor  for  the  amount 
specified,  that  acceptance  is  an  adnnssion  of  everything-  es- 
sential to  the  existence  of  such  liability.  Therefore,  ac- 
ceptance is,  in  the  first  place,  an  admission  of  the  signature 
of  the  drawer,  the  drawee  being  supposed  to  know  his  cor- 
respondent's handwriting,  and,  by  accepting,  to  acknowl- 
edge it;  and  in  a  suit  against  the  acceptor  he  would  not 
be  permitted  to  jdead  or  show  that  the  handwriting  was  not 
the  drawer's,  and  would  be  bound  by  his  acceptance  even 
though  the  drawer's  name  were  forged. '^^ 

§  274.   (2)  Admission  of  funds  of  drawer  in  drawee's  hands. 

—  In  the  second  place,  acceptance  admits  that  the  acceptor 
had  funds  of  the  draAver  in  his  hands,  for  the  drawing  of 
the  bill  imphes  this,  and  acceptance  in  the  usual  course  of 
business  only  follows  when  it  is  the  fact.  Therefore,  the 
acceptor  cannot  deny  that  he  was  in  funds  Avhen  suit  is 
brought  by  a  holder  of  the  bill;*'^  though  as  between  himself 
and  the  drawer  it  is  only  prima  facie  evidence  that  the 
drawer  had  funds  in  his  hands,  and  he  may  rebut  this  pre- 
sumption by  showing  that  the  acceptance  was  for  the  draw- 
er's accommodation,  or  otherA\dse  under  circumstances  which 
place  him  under  no  obligation  to  pay  the  bill  to  liim.*'^  But, 
notwithstanding  the  presumption  that  the  acceptor  has  funds 
of  the  drawer,  yet,  where  bills  have  been  drawn  upon  let- 
ters of  credit  to  enable  a  party  to  purchase  and  ship  mer- 
chandise, this  presmnption  is  rebutted,  and  the  drawer  be- 
comes the  primary  debtor,  and  is  liable  to  the  acceptor  for 
his  advances.  But  if  the  acceptor  has  notice  that  one  of 
two  joint  drawers  of  such  a  bill  has  merely  loaned  his  name 

rajenys  v.  Fawler,  2  Stra.  946;  Hoffman  &  Co.  v.  Bank  of  Mil- 
waukee, 12  Wall.   1!)3;  Goetz  v.  Bank,  119  U.  S.  556. 

60  Raborg  v.  Peyton,  2  Wheat.  385;  Hortsman  v.  Henshaw,  11  How. 
177;  Heurteniatte  v.  Alonis,   101   N.  Y.  63. 

61  Daniel  on  Xe<Totiable  Instruments,  §§  174-170;  Park  v.  Nichols, 
20  111.  App.  143;  Klopfer  v.  Levi,  33  Mo.  App.  322. 


§275.   THE  NATURE  ANI>  EFFECT  OF  ACCEPTANCE.      17.1 

to  give  currency  to  the  bill,  such  drawer  is  no  uion;  liable  to 
the  acceptor  than  if  he  had  merely  indorsed  the  l)ill.*'' 

i$  275.  (3)  Admission  of  drawer's  capacity  to  draw. —  In  the 
(hlrd  place,  the  accejjtor  admits  the  caj)acity  of  the  drawer 
to  draw  the  bill,  for  otherAnse  it  would  not  be  valid;"^  and 
therefore  he  cannot  set  up  a  plea,  that  the  drawer  of  a  bill, 
which  lie  had  accepted,  was  a  body  corporate  having  no 
legal  authority  to  draw  the  bill,  or  was  a  bankrui)t,  infant, 
married  woman,  or  fictitious  person.*'"*  When  the  bill  is 
drawn  in  the  name  of  a  finn,  acceptance  admits  that  there 
is  such  a  firm,  and  if  it  be  drawn  by  a  person  as  execu- 
tor, it  admits  his  right  to  sue  in  that  character.''^' 

§  276.  (4)  Admission  of  payee's  capacity  to  indorse. —  In 
the  fourtli  place,  the  acce])tor  admits  the  capacity  of  the 
payee  to  indorse  the  bill  when  it  is  drawn  payable  to  the 
payee's  order,  for  by  the  very  act  of  acceptance  he  agrees  to 
l)ay  to  his  order;*'"  and,  therefore,  he  cannot  show^  that  at 
the  time  of  acceptance  the  payee  was  an  infant,  an  insane 
person,  a  married  woman,  a  bankru])t,  or  a  corporation 
without  legal  existence.""  It  is  a  general  ])rinciple,  appli- 
cable to  all  negotiable  securities,  that  a  person  shall  not  dis- 
})ute  the  power  of  another  to  indorse  such  an  instrument, 
when  he  asserts  by  the  instrument  which  he  issues  to  the 
world,  that  the  other  has  such  ])owcr.'''^  Indeed,  there  could 
be  no  reason  why  the  accei)tor  should  be  interested  to  show 
that  the  payee  was  incomjietent  to  make  the  order;  for  he 
has  been  guaranteed  in  that  regard  by  the  drawer,  and  may 

<'2  Turner  v.   Browder,  5  Bush,  21(». 

6.{  Story  on  Bills.  S   113;   Byles  on  Bills   [*193],  325. 

<M  Halifax  v.  Lyle,  3  Welsh.,  Hurl.  &  Gord.  (Exch.)  46G;  Braithwaite 
V.  Gardiner,  8  Q.  B.  473;  Taylor  v.  Croker,  4  Esp.  187;  Cowtoa  v. 
Wickersham,  54  Pa.  St.  302;  Cooper  v.  Meyer,  10  B.  &  C.  468. 

65  Bass  V.  Clive,  4  Maule  &  S.  13;  Aspinwall  v.  Wake,  10  Bing.  51. 

60  Daniel  on  Negotiable  Instruments.  §§   93,  242. 

67  Jones  V.  Darch.  4  Price.  300:  Smith  v.  Marsatk,  0  C.  B.  4SG; 
Drayton  v.  Dah'.  2  B.  &  C".  2!)3 :  Daniel  on  Xeg()tial)lc  Instruments.  §  03 
ct  scq. 

68  Daniel  on  Xogotiahle   Instruments,  chap.  42.  section  3. 


17G  AccKi'TAXCE.  §§  277,  278. 

charge  the  aiiKtunt  in  account  against  him  whether  tiie  payee 
were  comjx'tt'nt  or  not. 

§  277.  (5)  Admission  of  agent's  handwriting  and  authority. 
— •  In  the  fifth  phice,  if  the  ])ill  be  drawn  by  one  professing 
to  act  as  agent  of  the  drawer,  the  acceptance  admits  his 
handwriting  and  authority  as  agent  to  draw.*^*^  In  the  lead- 
ing case  of  Robinson  v.  Yarrow,  the  question  arose  between 
the  acceptor  and  the  indorsee  of  the  draw'er  by  procuration, 
and  the  doctrine  is  stated  in  the  text  in  the  language  gen- 
erally used  by  text-writers  and  judges.  It  is,  however,  con- 
tended wdth  force  in  a  Louisiana  case,  that  the  doctrine  only 
applies  as  between  the  acceptor  and  a  hona  fide  transferee 
without  notice  of  want  of  authority  in  the  agent  to  draw; 
and  that  as  between  the  acceptor  and  the  payee  who  has 
taken  the  bill  from  the  agent,  the  former  is  not  estopped 
from  showing  that  the  agent  drew  without  authority,  the 
payee  being  himself  under  obligation  to  make  due  inquiry. ^^ 
And  this  scoms  to  be  a  reasonable  limitation  of  the  principle. 

^278.  What  acceptance  does  not  admit:  (1)  Signature  of 
payee. —  But  beyond  these  admissions  the  acceptance  does 
not  go.  In  the  first  place,  it  does  not  admit  the  genuine- 
ness of  the  signature  of  the  payee  Avhen  it.  pui'ports  to  bear 
his  indorsement,  or  that  of  any  other  indorser,  for  with 
their  handwriting  he  is  not  presumed  to  be  familiar;  and, 
therefore,  if  the  signature  of  the  payee  or  other  indorser 
be  forged,  the  acceptor  wdll  not  be  bound  to  pay  the  bill 
to  any  one  w^ho  is  compelled  to  trace  title  through  such  in- 
dorsements.'^^ And  if  he  has  gone  so  far  as  to  pay  the  bill 
to  an}^  one  holding  it  under  such  forged  indorsement,  he 
may,  as  a  general  rule,  recover  back  the  amount.''^  The 
rule  would  not  apply,  how^ever,  where  the  drawer  had  issued 
the  bill  wdth  the  forged  indorsement  upon  it,  for  then  the 

6!»  Robinson  v.  ^'anow,  7  Taunt.  4.55;  1  Parsons  on  Notes  and  Bills, 
322. 

70  Angel  V.  Ellis,  1  McGloin,  Gl. 

71  Holt  V.  Ross.  .'54  N.  Y.  474;  Edwards  on  Bills,  432. 

72  Holt  V.  Ross.  54  X.  Y.  474:  Dick  v.  Levericli,  11  La.  573:  Williams 
V.  Drexel,  14  Md.  SGfi. 


§   27!».         IIIK    .NATUUK    AND    KIKKCT    OK    ACCEI'TAXCK.  177 

acceptor  could  charge  the  amount  in  account  again.-i  hiui, 
and  as  the  forged  iudorsement  could  in  such  case  subject 
him  to  no  loss,  he  would  not  be  entitled  to  recover  back  the 
amount.'''  The  acceptance  does  not  admit  tlie  signature  of 
tlic  indorser,  even  when  the  bill  is  ])a_val)l{'  to  tiic  drawer's 
order,  and  purports  to  be  indorsed  by  him  in  the  same  hand- 
writing as  the  drawer's. ^^  But  if  the  drawer  is  a  fictitious 
person,  and  the  bill  is  payable  to  the  drawer's  order,  the 
acceptor's  undertaking  is  that  he  will  pay  to  the  signature 
of  the  same  person  that  signed  for  the  drawer;  and  in  snch 
case  the  holder  may  show,  as  against  the  acceptor,  that  the 
signature  of  the  fictitious  drawer  and  of  the  first  indorser 
are  in  the  same  handwriting.''' 

§  279.   (2)  Acceptance  no  admission  of  agency  to  indorse 

In  the  second  place,  acceptance  does  not  admit  agency  to 
indorse,  which  must  be  proved  by  the  holder  in  order  to 
recover  against  the  acceptor,  even  though  the  acceptor  ac- 
knowledges agency  to  draw  the  bill,  and  the  indorsement 
was  upon  it  at  the  time  of  accc])tance.  Thus,  where  a  bill 
was  drawn  over  the  signature,  "  A.  Henry  p.  proc.  C.  Stae- 
ben  cSr  Co.,''  and  was  expressed  to  be  payable  ''  to  our  order," 
and  was  indorsed  in  like  manner  as  drawn:  "  A.  Henry 
p.  proc.  C  Staeben  6z  Co.,"  and  was  accepted  by  the  de- 
fendant, and  sued  on  by  the  i)laintifi",  it  was  held  that,  in 
order  to  recover,  he  must  prove  the  procuration  to  indorse. 
And  Park,  J.,  said:  '*  The  mere  acceptance  proves  the  draw- 
ing, but  it  never  proves  the  indorsement;  it  is  not  at  all 
necessary  that  a  power  given  to  draw  bills  by  procuration 
should  enable  the  agent  to  indorse  by  procuration;  the  first 
is  a  power  to  get  funds  into  the  agent's  hands,  the  other  to 
pay  them  out."  ^'' 

73  Hort^imaii  v.  Hensliaw,  11  IIuw.  177;  Coggill  v.  American  Exclian.,'e 
Bank.  1  N.  Y.  11.3. 

"4  Robinson  v.  Yarrow.  7  Taunt.  4.").'):  Williams  v.  Droxi-l.  14  .Md.  50(5. 

75  Cooper  V.  Meyer.  10  B.  &  C.  4G8 :  Beeman  v.  Duck.  1 1  M.  &  W.  251. 

"''•Robinson  v.  Yarrow,  7  Taunt.  455;  Benjamin's  Chalmers'  Digest, 
211. 

12 


178  ACCEPTANCE.  §§  280,  281. 

§  280.  (3)  Acceptance  no  admission  of  genuineness  of  terms 
in  body  of  the  bill. —  In  the  third  place,  the  acceptance  does 
not  admit  the  genuineness  of  the  terms  contained  in  the  body 
of  that  bill  at  the  time  of  the  acceptance;  and,  therefore, 
if  at  that  time  they  had  been  altered  so  as  to  pnrport  to  bind 
the  drawer  for  a  larger  smn,  or  in  a  different  manner  than 
that  in  the  original  bill,  he  will  not  be  boimd  by  his  accept- 
ance to  pay  the  amount,  unless  the  drawer  had  by  his  own 
carelessness  afforded  opportunity  for  the  alteration,  and 
the  acceptor  coidd  therefore  charge  him  in  account  with  the 
whole  amount.''  But  where  the  drawer  alters  it  himself,  or 
acquiesces  in  an  alteration,  before  acceptance,  it  binds  him, 
and  therefore  the  acceptor.'^® 

If  the  drawer  w^ere  not  responsible  for  affording  the  op- 
portunity for  the  alteration  to  be  made,  the  acceptor  could 
not  only  defend  against  a  recovery  upon  the  bill,  but  might 
himself  recover  back  the  amomit  paid  upon  it,  or,  at  least,  to 
the  extent  of  the  amount  for  which  he  would  still  remain 
liable  to  the  drawer.^®  If,  however,  the  acceptor  w^ere  him- 
self responsible  for  issuing  the  bill  in  such  a  form  as  to 
admit  of  its  being  easily  forged  or  altered  —  as  wdiere  an 
acceptor  wrote  bis  acceptance  in  blank,  on  an  agreement 
with  the  drawer  that  he  should  not  draw  for  over  $1,000, 
and  the  latter  inserted  a  larger  sum  and  passed  the  bill  to 
the  plaintiff  —  he  would  be  bound  for  the  whole  amount,  and 
could  not  recover  it  back  if  paid.^^ 

SECTION"  VI. 

BY  WHOM,  AND  WHEN,   BILLS   SHOULD   BE   ACCEPTED. 

§  281.  Person  who  may  accept. —  The  drawing  of  a  bill  im- 
ports a  contract  on  the  part  of  the  drawer  that  the  drawee 
is   a  person   competent  to    accept;    and,    therefore,    if   the 

77  Young  V.  Grote,  4  Binfr.  2.53;  Young  v.  Lehman,  6.3  Ala.  519; 
White  V.  Continental  Nat.  Bank,  G4  N.  Y.  320. 

78Langton  v.  Lazarus,  .5  :M.  &  W.  G28;  Ward  v.  Allen,  2  Mete. 
(Mass.)  57. 

70  Bank  of  Commerce  v.  Union  Bank,  3  N.  Y.  230. 

80  Van  Duzer  v.  Howe.  21  N.  Y.  531. 


§282.  I5Y    WIKXM,    AND    WIIKX,     IMI.LS    ACCKPTKD.  1T'.> 

holder  upon  presentment  of  the  bill  ascertains  that  the 
drawee  is  incapable  of  contracting  —  for  instance,  is  a  minor, 
an  idiot,  or  a  married  woman  —  he  may  cause  it  to  be  pro- 
tested, and  proceed  against  antecedent  j)arties,  as  usual  in 
cases  of  dishonor." 

It  follows,  therefore,  as  a  general  rule,  tliat  the  bill  shouhl 
and  can  be  accepted  only  by  the  party  on  whom  drawn  or 
his  authorized  agent,  except  in  the  cases  of  acceptance  for 
honor ;'''^  and  if  a  bill  addressed  to  one  be  accepted  by  two 
persons,  it  has  been  thought  that  the  acceptance  of  the  first 
will  be  vitiated  by  having  been  altered  in  an  essential  part,^^ 
unless  nuule  with  the  acceptor's  consent.  But  if  any  other 
person,  after  an  acceptance,  subsequently  accepts  the  bill 
for  the  purpose  of  guaranteeing  its  credit,  at  the  acceptor's 
request,  in  the  usual  form  of  an  acceptance,  then,  if  there 
is  a  sufficient  consideration,  lie  may  be  Ixmnd  thereby  as 
a  guarantor;  but  he  is  not  liable  as  an  acceptor.'^  And  the 
addition  will  not  be  a  material  alteration. ^"^ 

A  party  may  be  bound  as  an  acceptor  V)v  any  name  or 
designation  he  may  see  fit  to  adopt,  provided  it  clearly  ap- 
pears by  extraneous  evidence  who  was  intended;  and  if  he 
intends  to  contract  by  a  certain  designation,  he  is  estopped 
to  deny  that  the  name  by  Avhicli  he  assumed  to  enter  into 
the  contract  was  the  appropriate  appellation.  "  The  West 
Tennessee  Department  of  the  Life  Association  of  America" 
would  therefore  be  bound  upon  an  acceptance  made  by  its 
proper  officer  of  a  ])ill  addressed  to  "  The  Western  De- 
partment of  the  Life  Association  of  America."  ^ 

§  282.  When  accepted  by  stranger  to  the  instrument. — 
Where  a  person  other  than  the  one  addressed  as  drawee 
writes  his  name  across  the  face  of  the  bill,  it  would  be  com- 

81  Edwards  on  Bills,  381;  Chitty  on  Bills  [*192],  221;  Tooting  v. 
irubhard.  3  Bos.  &  P.  291. 

SiiPolhill  V.  Walter,  3  H.  &  Ad.  114;  May  v.  Kelly,  27  Ala.  497; 
Keenan  v.  Xash,  8  ]Minn.  409. 

8.1  Thompson  on  Bills,    112.  212. 

8*  Story  on  Bills,  §  254;  Jackson  v.  Hudson.  2  Campb.  447. 

86  Smith  V.  Lockridgp.  8  Bnsh.  42,5. 

SfiHascall  v.  Life  Assn.  of  America,  'i  Ilun,  152. 


180  AccEi'TA.xcE.  §§283,284. 

petent  for  him  to  show  as  between  immediate  parties  (and 
on  account  of  its  ambiguity,  perhaps,  as  to  others)  in  what 
character  he  intended  to  be  l)onnd,**' 

But  if  a  party  accept  a  bill  in  which  no  drawee  is  named, 
it  will  be  regarded  as  acknowledging  that  he  was  the  drawee 
and  ^\'ill  operate  as  a  complete  accepted  instrument.^* 

§  283.  An  acceptance  may  be  made  by  an  agent  but  cer- 
tainly the  holder  may  require  the  production  by  him  of 
clear  and  explicit  authority  from  his  principal  to  accept  in 
his  name,  and  without  its  production  may  treat  the  bill  as 
dishonored  ;^^  and  it  has  been  doubted  whether  the  holder 
is  bound  to  acquiesce  in  an  acceptance  by  an  agent,  as 
such  an  acceptance  would  multiply  the  jn-oofs  of  the  holder's 
title. '^'^  But  if  the  agency  were  clear,  we  think  the  holder 
would  be  bound  to  take  the  agent's  acceptance  —  acceptance 
by  procuration,  as  it  is  termed.^^  If  the  holder  takes  an 
acceptance  from  one  unduly  alleging  his  agency,  and  \^nth- 
out  giving  notice  to  antecedent  parties,  they  will  be  released, 
if  the  principal  refuses  to  ratify  the  act.^^ 

If  the  bill  be  dra"HTi  upon  an  agent  in  his  individual  name, 
it  would  seem  clear  on  principle  that  none  but  he,  as  an  in- 
dividual, could  accept.®^ 

§  284.  Bills  drawn  on  joint  parties  and  partners. —  If  a  bill 
is  drawn  on  two  persons  not  partners,  both  should  accept, 
and  if  either  refuse,  the  bill  may  be  protested  for  his  non- 
acce])tance;^'*  but  the  party  accepting  will  be  bound  by  his 
acceptance.^^     If  the  bill  is  addressed  to  two  persons,  "  or 

87  Curry  v.   Reynolds,  44   Ala.   .349. 

88  Wheeler  v.  Webster,  1  E.  D.  Smith,  1;  Gray  v.  Milner,  8  Taunt. 
7.3n:   Davis  v.  Clarke,  6  Q.  B.  10. 

8f)Atwo6d  V.  :Munninnrs,  7  B.  &  C.  278;  Roscoe  on  Bills,  71. 
soCoore  v.  Callaway,  1  Esp.  115;  Chitty  on  Bills  (13th  Am.  ed.),  321. 
91  Thompson  on  Bills,  211. 

92Thompson  on  Bills,  211;  Chitty  on  Bills    (1.3th  Am.  ed).  .321. 
03  Daniel  on  Nopotiable  Instruments,  §  487. 

94Dupays  v.  Shopherd,  Holt,  297;  Chitty  on  Bills  (13th  Am.  ed.), 
73,   321. 

oriOwen  v.  Van  Uster,  10  C.  B.  318;  Smith  v.  Melton,  133  Mass.  3G9. 


§285.  IIV     WHOM,    AND    WUK.N,     I'.Il.l.S    ACCKI'TKU.  1^1 

either  of  thciii,"  acceptance  by  either  is  a  sufficient  compli- 
ance with  its  mandate."'' 

If  a  bill  be  drawn  upon  a  linn,  it  may  be  accepted  by  any 
one  of  the  partners  in  the  partnership  name;'''  and  it  will 
be  a  good  acceptance  of  the  firm  (as  we  think,  although  the 
authorities  are  in  conflict),  if  only  the  name  of  the  accepting 
partner  be  signed,  as  it  will  be  understood  to  signify  that 
the  firm  responds  to  the  request  of  the  bill,  and  that  the 
signing  partner  attests  it.***  Rut  whether  the  acceptance  be 
in  the  name  of  the  firm,  or  of  the  signing  partner,  it  will  not 
bind  the  firm  as  against  the  drawer  cognizant  of  the  facts, 
unless  the  bill  was  drawn  for  partnership  purposes,^  except 
in  the  hands  of  a  bona  fide  holder  for  value,  without  notice, 
in  which  event  it  would  be  valid  whether  drawm  for  partner- 
ship purposes  or  other^^^se.^ 

If  a  bill  drawn  on  an  individiud  member  of  a  finn  be 
accepted  by  him,  it  "\nll  bind  him  indi^ndually,  but  not  the 
firm,  nlthouah  expressed  to  be  on  account  of  the  firm. 

§  285.  When  acceptance  may  be  made. —  The  acceptor  may 
make  his  acceptance  before  the  bill  has  been  signed  by  the 
drawer,  and  while  it  is  othenvise  incomplete,  and  deliver 
it  to  be  completed  by  the  necessary  insertions;^  and  his 
acceptance  is  valid  if  made  after  the  bill  is  overdue,  and 
after  it  has  been  dishomtred  by  refusal  to  accept,  or  by  non- 
payment, followed  by  ])rotest.^  It  is  not  necessary  that  the 
bill  shonld  bo  drawn  by  the  same  person  to  whom  the  ac- 
ceptor handed  the  blank  acceptance.'*     And  whore  the  blank 

o«  Thompson  on  Bills,  212. 

OTPinkney  v.  Hall,  1  Salk.  12G:  :Mason  v.  Ruinsey.  1  Campb.  384. 

»8  Mason  v.  Rumsey,  1  Campb.  384;  Chitty  on  Bills  (13th  Am.  ed.), 
53,  54;   Tolman  v.  Hanrahan,  44  Wis.  133. 

flaPinkney  v.  Hall,  1   Salk.  12fi. 

iCatskill  Bank  v.  Stall.  1")  Wend.  3(14:  Livingston  v.  Roosevelt.  4 
Johns.   3.')1. 

2  TTarvey  v.  Cane,  34  L.  T.  R.  ()4  ;  Daiiiol  on  Xcgotiablo  Instruiiifiits, 
§  01  e^  seq. 

3  Mechanics'  Bank  v.  Livingston,  33  Barb.  458;  Spalding  v.  Andrews, 
48  Pa.  St.  413;  Wynne  v.  Raikes.  5  East,  513;  Grant  v.  Shaw.  IG  Mass. 
344. 

•^  Schultz  v.  Ashlev,  7  Car.  &  V.  99. 


182 


ACCEPTANCE.  §§  28G,  287. 


acceptance  was  filled  np  after  the  lapse  of  twelve  years,  and, 
as  the  jurv  fcuiiul,  after  the  lapse  of  a  reasonable  thne,  the  ac- 
ceptor wJs  held  liable  to  a  hona  fide  indorsee.^  Furthermore, 
the  acceptor  in  blank  will  be  liable  for  any  amount  for 
which  the  bill  is  tilled  np  when  it  has  passed  into  the  hands 
of  any  hona  fide  holder,  without  notice  that  his  authority  has 
been  exceeded."' 

Acceptance  dates  from  delivery,  until  which  time  it  is 
revocable;'  but  if  not  in  the  hands  of  the  acceptor,  and  ac- 
cepted verbally,   this  priu('i])l('  would  have  no   application.^ 

§  286.  Acceptance  of  bill  after  maturity,  and  after  death  of 
drawer. —  There  may  be  acceptance  of  a  bill  after  it  has 
become  payable,  and  after  protest,  in  which  case  the  bill  is 
regarded  as  payable  on  demand.'^  And  after  acceptance  has 
been  once  refused,  the  drawee  may  afterward  accept,  and 
bind  himself  as  acceptor  —  Init  he  cannot  Ijind  the  other 
parties  unless  the  bill  was  duly  protested. ^'^ 

Death  of  the  drawer  is  no  revocation  of  a  bill  in  the 
hands  of  a  hona  fide  holder;  and,  therefore,  after  his  death, 
it  may  be  accepted  by  the  drawee,  although  he  has  knowl- 
edge of  that  fact.^^  The  presumption  is  that  a  bill  was  ac- 
cepted before  maturity,  and  within  a  reasonable  time  after 
date. ^2 

ij  287.  Drawee  may  deliberate  twenty-four  hours  whether  or 
not  to  accept. —  When  the  bill  is  presented  to  the  drawee 
for  acceptance,  he  is  entitled,  if  he  desires  it,  to  a  reason- 
able time  to  examine  into  the  state  of  his  accounts  with 
the  drawer,  and  deliberate  whether  or  not  he  will  honor 
the  bill.      To  afford  him  this  opportunity,  which  it  may  be 

5  Montague  v.  Perkins,  22  Eng.  L.  &  Eq.  .516. 

<>  Bank  of  Commonwealth  v.  Curry,  2  Dana,  142;  Moody  v.  riuelkehl, 
1.3  Ga.  55. 

7  Cox  V.  Troy,  5  B.  &  Aid.  474. 

8  1  Parsons  on  Notes  and  Bills,  291. 

9  Christie  v.  Pearl,  7  M.  &  W.  491;  Bank  of  Louisvillo  v.  EUery,  34 
Barb.  630. 

lOWj-nne  v.  Raikes.  5  East,  514;  Thompson  on  Bills.  214. 

n  Cutts  V.  Perkins,  12  Mass.  206;  Hammond  v.  Barclay,  2  East,  227. 

12  Roberts  v.  Bethel.  12  C.  B.  778. 


§§288,280.     liY  \viiu.M,  AM)  wiiK.N,  uir.i.s  AccKi-ri:i>.     ISo 

very  necessary  fur  liiiu  tu  avail  of,  lie  is  allowed  twenty- 
four  hours,  and  it  is  usual  to  leave  the  bill  with  him  for  that 
period;'^  though  it  has  been  said  that  if  the  post  goes 
out  in'  I  he  meantime,  the  bill  should  be  protested^  imme- 
diately if  not  accepted,  and  notice  of  dishunor  sent.'*  But 
this  rule  is  too  rigid,  especially  in  countries  like  the  Tnited 
States,  in  which  the  mail  facilities  are  so  great;  nor  does 
it  consist  with  the  rule  allo\dng  a  whole  day  for  pn-varation 

of  notice.^'' 

But  if  the  drawee  refuses  to  accept  within  the  twenty- 
four  hours,  the  bill  must  be  protested  immediately;''^  and  rf 
at  the  end  of  twenty-four  hours  the  drawee  does  not  signify 
his  acceptance,  protest  must  be  immediately  made,  and  no- 
tice given. '^ 

§  288.  As  to  the  date  of  acceptance. —  If  the  acceptance 
bears  a  date,  it  will  be  taken  as  pritna  facie  evidence  of  the 
time  when  it  was  made,  even  when  the  date  is  in  a  different- 
handwriting  from  the  rest  of  the  acceptance.'^  When  the 
acceptance  bears  no  date,  there  is  no  presumption  that  it 
was  made  at  the  date  of  drawing;  but,  on  the  contrary,  it 
^yi[\  be  presumed  that  it  was  made  afterward.'^  The  pre- 
simiption  is,  that  it  was  made  within  a  reasonable  time  after 
drawing,  and  prior  to  the  term  of  payment.-'^  Tt  is  said, 
in  Pardessus,  that  it  may  be  inferred  to  have  been  accepted 
on  tho  date  of  the  bill.-' 

§  289.  Acceptance  for  honor. —  There  is  a  peculiar  kind 
of  acceptance  called  acceptance  for  honor,  or  supra  protest. 

13  Connelly  v.  IMeKean,  G4  Pa.  St.  11.3;  Overman  v.  Hoboken  City 
Bank,  31  N.  J.  L.  563;  Montgomery  County  Bank  v.  Albany  City  Bank, 
8  Barb.  399. 

14  Bellasis  v.  Hester,  1  Ld.  Raym.  280;  Thompson  on  Bills,  213. 

15  Morrison  v.  Buchanan,  6  Car.  &  P.  18;  Chitty  on  Bills  (13th  Am. 
ed.),  317-321. 

16  1  Parsons  on  Notes  and  Bills.  348;  Edwards  on  Bills,  400. 
IT  Ingram  v.  Forster,  2  J.  P.  Smith.  242. 

iSGlossup  V.  Jacob,  4  Campb.  227;   Thompson  on  Bills,  217. 

19  Begbi  V.  Levi,  1  C.  &  J.  180. 

20  Roberts  V.  Bethel.  22  L.  .T.  C.  P.  69. 

21  1   Pardessus,  393. 


IS-i 


ACCEPTANCE.  §  290. 


Tliis  most  freciuontly  happens  Avben  the  original  drawee  (aiid 
the  drawee  au  hesuin,  if  any)  refuses  to  accept  the  bill,  in 
which  case  a  stranger  may  accept  the  hill  for  the 
honor  of  some  one  of  the  parties  thereto,  which  acce])t- 
ance  will  inure  to  the  benefit  of  all  the  parties  subsequent 
to  him  for  whose  honor  it  was  accejitod/ 

§  290.  Circumstances  under  which  there  may  be  such  ac- 
ceptance; method  of. —  An  acceptance  for  honor  is  only  al- 
lowable when  acceptance  by  the  drawee  has  been  refused, 
and  when  the  bill  has  been  protested,  and  hence  it  is  called 
acceptance  supra  protest.^ 

The  reason  assigned  for  this  is  that  the  drawers  and  in- 
dorsers  have  a  right  to  say  that  the  bill  was  not  primarily 
dra\\ai  on  the  acceptor  for  honor;  and  the  only  proper  proof 
of  the  refusal  of  the  original  drawee  is  by  protest,  that  being 
the  known  instrument,  by  the  custom  of  merchants,  to  es- 
tablish the  facts.^^  The  usual  form  used  in  such  acceptance 
is,  "Accepted  supra  protest,  for  the  honor  of  A.  B."  An- 
other approved  form  is,  "  Accepted  under  protest,  for  the 
honor  of  A.  B.,  and  mil  be  paid  for  his  account,  if  regularly 
protested  and  refused  when  due."  It  is  essential  that  the 
acceptor  for  honor  appear  before  a  notary  public  and  de- 
clare that  he  accepts  the  protested  bill  in  honor  of  the 
drawer  or  indorser,  as  the  case  may  be,  and  that  he  will  pay 
it  at  the  appointed  time.^^ 

It  is  the  duty  of  the  acceptor  supra  protest,  as  soon  as  he 
has  made  the  acceptance,  to  notify  the  fact  to  the  party 
for  whose  honor  it  is  done;^"  and  the  party  paying  a  bill 
under  protest  for  honor  must  give  reasonable  notice  to  the 
person  for  whose  honor  he  pays,  othermse  he  ^x\\\  not  be 
bound   to  refund."' 

22Koni^'  V.  Bayard,  1  Pet.  250:  Hoare  v.  Cazonove,  16  East,  391; 
Story  on  Bills,  §§  255,  256. 

23Bayley  on  Bills,  177;   Story  on  Bills,  §§  255.  256. 

24  Story  on  Bills,  §  256. 

25  Gazzani  v.  Armstrong,  3  Dana,  554. 

26  Story  on  Bills,  §  259;   Edwards  on  Bills,  441. 

27  Wood  V.  Pugh,  7  Ohio,  pt.  II,  156. 


§§  291,  2!J:i.    BY  wiKJM,  and  wiikx,  iulls  accepted.     165 

§  291.  As  to  who  may  be  acceptor  for  honor. —  A  stranger 
may  undoubtedly  accept  for  honor;  and  by  the  word  stran- 
ger in  this  connection  is  meant  any  third  person  not  a 
party  to  the  bill.  It  seems  that  acceptance  for  honor  may 
also  be  made  by  the  drawee,  who,  if  he  does  not  choose  to 
accept  the  bill  dra^^^l  generally  on  accoimt  of  the  person  in 
whose  favor,  or  on  whose  account,  he  is  advised  it  is  drawn, 
he  may  accept  it  for  the  honor  of  the  drawer,  or  of  the  in- 
dorsers,  or  of  all  or  any  of  thcm.^* 

]^>ut  if  the  drawee  were  bound  in  good  faith  to  accept  the 
bill,  ho  cannot  change  his  relations  to  the  parties,  and  accept 
it  supra  protest  for  the  honor  of  an  indorser;  he  must  either 
accept  or  refuse."" 

An  acceptor  supra  protest  for  the  honor  of  an  indorser 
may,  however,  recover  against  such  indorser,  though  he  ac- 
cepted at  the  instance  of  the  drawee,  and  as  his  agent,  pro- 
vided the  indorser  were  not  thereby  damnified.  The  in- 
dorser might  avail  himself  of  any  defense  w^hich  he  could 
have  made,  had  the  drawee  accepted  for  his  honor,  and 
then  sued  upon  the  acceptance.^  It  is  immaterial,  indeed, 
as  to  the  defenses  which  a  drawer  or  indorser  may  make 
against  an  acceptor  for  honor,  whether  such  acceptor  acted 
at  the  instance  of  the  drawer,  or  as  the  agent  of  the 
draweo.^^ 

§  292.  Several  acceptors  for  honor  of  different  pajties. — 
While  there  cannot  be  successive  acceptors  of  a  bill,  gen- 
erally speaking,  there  may  be  several  acceptors  supra  protest 
for  the  honor  of  different  parties  —  that  is,  one  may  accept 
for  the  honor  of  the  drawer,  another  for  the  honor  of  the 
first  indorser,  and  another  for  the  honor  of  the  second  in- 
dorser, and  so  on.^^ 

And  the  acceptor  supra  protest  may  accept  for  the  h<Mior 
of  any  one,  or  all,  of  the  parties  to  the  bill;  and  his  accept- 

28  story  on  Rills.  §  259. 

29  Schimmelpennieh  v.  l?ayard,  1  Pet.  2G4. 
30Konig  V.  Bayard,  1  Pet.  250. 

SlGazzam  v.  Armstrong,  .3  Dana.  5.54;  Wood  v.  Punrh,  7  Ohio.  \'>(\. 
32  Story  on  Bills,  §  200;   Byles  on  Bills   ['255],  403;    1   Parsons  on 
Notes  and  Bills,  315. 


ISO  ACCEl'TANCE.  §§  293,  21)4. 

auce  should  designate  for  whose  honor  it  was  made,  in  which 
case  it  couhl  be  at  once  perceived  for  whose  benefit  it  in- 
ured.^^  If  the  acceptance  do  not  specify  for  whose  honor 
it  was  made,  it  will  be  construed  to  be  for  the  honor  of  the 
drawer;^*  and  if  for  the  honor  of  the  bill,  or  of  all  the  par- 
ties, it  should  be  so  expressed.^^ 

§  293.  As  to  the  rights  of  an  acceptor  for  honor. —  By  his 
acceptance  for  honor,  the  acceptor  has  recourse  against  the 
party  for  whose  honor  he  accepts,  and  all  parties  whom  the 
latter  would  have  recourse  against,  and  none  others.^"  But 
the  acceptor  for  the  honor  of  the  drawer  cannot  recover 
against  him  without  proof  of  a  presentment  for  acceptance 
or  payment,  and  refusal  and  notice  to  the  drawer.^'^ 

If  he  accepts  for  the  honor  of  the  drawer  only,  he  wall  in 
general  have  no  recourse  against  the  indorsers;  and  if  for 
the  honor  of  an  indorser,  he  will  have  no  recourse  against  a 
subsequent  indorser"^ —  the  exception  arising  in  cases  where 
the  person  for  whose  honor  he  accepts  the  bill  might  have 
recourse  against  either,  as  when  he  is  an  accommodation 
drawer  or  indorser. ^^ 

§  294.  As  to  the  liability  of  the  acceptor  for  honor. —  The 
acceptance  for  honor  or  supra  protest  is  not  an  absolute 
engagement  like  an  ordinary  acceptance  for  value.  It  is  a 
conditional  engagement,  and  to  render  it  absolute,  the  per- 
formance of  several  acts  as  conditions  precedent  are  essen- 
tial. Such  an  acceptance,  says  Lord  Tenterden,  C.  J.,  "  is 
to  be  considered  not  as  absolutely  such,  but  in  the  nature 
of  a  conditional  acceptance.  It  is  equivalent  to  saying  to 
the  holder  of  the  bill,  '  keep  this  bill,  don't  return  it,  and 
when  the  time  arrives  at  which  it  ought  to  be  paid,  if  it  be 

33Hussey  v.  Jacob,  1  Ld.  Rajnn.  88;  1  Parsons  on  Notes  and  Bills, 
31 3. 

34Chitty  on  Bills   [*34G],  387;   1  Parsons  en  Notes  and  Bills,  313. 

35  Gazzam  v.  Armstrong,  3  Dana,  552. 

36Goodall  V.  Polhill,  1  C.  B.  233;  Byles  on  Bills  [*250L  406. 

3T  Baring  v.  Clark,  10  Pick.  220;  Sfhofield  v.  Bayard,  3  Wend.  488. 

38  Gazzam  v.  Armstrong,  3  Dana,  554. 

39  Story  on  Bills,  §   256. 


§  205.  BY     WHOM,    AND    WllK.N,    IJILLS    ACCKI'TKJJ.  L^iT 

not  paid  L)V  the  party  on  wlmni  it  was  originally  drawu, 
come  to  me  and  you  shall  liavo  your  money.'  "  "*"  The  nature 
of  such  an  acceptor's  undertaking  is  more  analogous  to  that 
of  an  indorser"^'  than  that  oi  an  ordinary  acceptor,  and  to 
render  him  absolutely  liable  it  is  necessary: 

First.  To  present  the  bill  at  maturity  to  the  original 
drawee,  notwithstanding  his  prior  refusal,  because  between 
the  lime  of  such  refusal  and  the  time  of  maturity,  effects 
may  have  reached  the  drawee,  out  of  which  he  might,  if 
the  bill  were  again  presented,  pay  it;  and  the  drawer  and 
other  parties  are  entitled  to  the  chance  of  any  benefit  which 
might  arise  from  such  second  denuuul.  And  if  it  were  not 
made  (except  in  the  case  of  a  bill  made  i)ayable  at  a  place 
not  being  the  residence  of  the  drawee),  the  drawer  and  in- 
dorsers  would  he  discharged;  and  as  the  acceptor  supra  pro- 
test would  thereby  lose  recourse  against  them,  he  is  also 
discharged.*^ 

Second.  Upon  refusal  by  the  original  drawee  to  pay  the 
bill  Avhen  it  is  presented  at  maturity,  it  must  be  again  pro- 
tested for  nonpayment,  and  such  protest  and  presentment 
must  be  alleged  in  the  declaration  against  the  acceptor  supra 
protest.  And  tliird,  it  is  then  necessary  to  present  the  bill 
in  due  time  to  the  acceptor  supra  protest.*^ 

If  on  such  presentment  the  acceptor  supi^a  protest  re- 
fuses to  pay,  there  must  be  another  formal  protest,  stating 
the  presentment  for  payment  to  the  drawee,  the  protest  for 
his  nonpayment,  the  presentment  of  the  bill  and  accept- 
ance to  the  acceptor  supra  protest,  and  demand  of  pay- 
ment of  him,  and  the  protest  for  his  nonpayment;  and  no- 
tice thereof  must  be  fortlndth  forwarded  to  the  draAvor  and 
indorsers.** 

§  295.  Admissions  of  acceptor  for  honor. — There  appears  to 
be  a  conflict  of  opinion  as  to  the  extent  of  the  admission 

40  Williams  v.  Germaine,  7  B.  &  C.  457. 

41  1  Parsons  on  Notes  and  Bills,  315. 

42  Barry  v.  Clark.  19  Pick.  220;   Story  on  Bills.  §  201. 
43Chitty  on  Bills  ["S.^O,  .3511,  302;    Story  on  Bills.  S  261. 

4-*  Chilly  on  Bills   [*352],  303;   1  Parsons  on  Not4?3  and  Bills.  320. 


188  •  ACCEPTANCE.  §§296,297. 

of  the  acceptor  .^upni  prolc.^l.  'Y\w  rule  has  heen  broadly 
stated  to  he  that  he  does  not  admit  the  genuineness  of  the 
signature  of  any  jiarty  for  whose  honor  the  acceptance  is 
given,  not  even  the  drawer's,  and  therefore  he  could  recover 
money  ])aid  to  the  holder  if  the  hill  should  prove  to  be  a 
forgery  ;^^'  but  the  rule  stated  is  certainly  subject  to  the 
modification  that  one  who  accepts  for  the  lionor  of  the 
drawer  is  estopped  from  denying  that  the  bill  is  a  valid  bill; 
and,  consecpiently,  it  would  not  be  competent  for  him  to  set 
up  as  a  defense  to  an  action  by  an  indorsee  that  the  payee  is 
a  fictitious  person,  and  that  he  was  igiiorant  of  the  fact  at 
the  time  he  accepted  the  bill."*" 

§  296.  Holder  not  bound  to  take  acceptance  for  honor. — 

The  hohh'r  is  in  no  case  bound  to  take  an  acceptance  for 
honor;"*'  hut  if  he  receives  it,  and  it  is  for  the  honor  of  a 
particular  party,  he  cannot  sue  such  party  until  the  matu- 
rity of  the  bill,  and  its  dishonor  by  the  acceptor  supra  pro- 
test.'^^  And  if  the  acceptance  is  for  the  honor  of  all  the  par- 
ties to  the  bill,  he  cannot  sue  any  of  them  until  it  has  ma- 
tured and  been  dishonored.'*^ 

But  there  seems  to  be  no  reason  why  the  holder  may  not 
sue  prior  parties,  when  the  acceptance  is  for  honor  of  a  par- 
ticular party,  after  giving  them  due  notice.^^ 

SECTION^  VII. 

FORM    AND    VARIETIES    OF   ACCEPTANCE. 

§  297.  Varieties  of. —  According  to  the  law  merchant,  an 
accef)tance  may  be  (1)  expressed  in  words  or  (2)  implied 
from  the  conduct  of  the  drawee.  (3)  It  may  be  verbal  or 
written.  (4)  It  may  be  in  writing  on  the  bill  itself  or  on 
a  sej)arate  ])aper.      (5)   It  may  be  before  the  bill  is  drawn 

*^>  1  Parsons  on  Notes  and  Bills,  32.3. 

46  Phillips  V.  Thurn,  IS  C.  B.   (N.  S.)  G94. 

47Mitfor(l  V.  Walcott,   12   Mod.  410;   Chitty  on  Bills   |*345],  387. 

48  Williiims  V.  Gcrmaine,  7  B.  &  C.  468. 

49  Story  on  Bills,   §  2.')8. 
60  Story  on  P.ills,   §  258. 


§  298.  lOKM     AM)    \  Ai:iKTli:.S    OF    ACCKl'TANCK.  180 

or  aftenvards.  And  (G)  there  may  be  absolute,  conditional, 
and  (jualitied  acceptances.^^ 

Acceptance  by  telegram  has  been  held  sufficient;^'  and 
under  the  statutes  of  Xew  York,  which  make  an  uncondi- 
tional ])romise  to  accept  a  bill  before  it  is  drawn  equivalent 
to  actual  ncccptaucc  iu  favor  of  a  party,  who  upon  the 
faith  thereof  receives  it  for  valuable  consideration,  it  has 
been  adjudged  that  a  telegram  written  and  sent  by  the  prom- 
isor operates  as  acceptance.^^ 

By  statute  in  many  of  the  States  these  principles  of  the 
law  merchant  governing  acceptances  are  moditied  or  re- 
pealed in  one  respect  or  another,  as  will  be  seen  hereafter.^' 

§  298.  Express  acceptances. —  An  express  acceptance  is 
usually  made  by  writing  the  word  "  accepted  "  across  the 
face  of  the  bill  (which  the  drawee  may  do  with  pen  or 
pencil),  and  adding  the  acceptor's  signature.  But  by  the 
law  merchant  neither  the  word  nor  the  signature  is  neces- 
sary —  '"  accepted  ''  without  a  signature,  "  seen,"  "  hon- 
ored," "  presented,"  ''  I  will  pay  the  bill,"  or  writing  the 
day  and  month  when  presented;  or  a  written  direction  of 
the  drawee  on  the  bill  to  some  other  person  to  pay  it,  or 
the  signature  of  the  drawee  alone,  or  the  word  "  ex- 
cepted," it  being  obviously  intended  for  "  accepted."  ^^  The 
words,  "  I  take  notice  of  the  above,"  were  held  in  ]\Iassa- 
chusetts  not  necessarily  to  import  acceptance;  and  even  if 
they  did,  unexplained,  to  be  open  to  explanation,  as  between 
immediate  parties.^*"'  Where  the  drawee  wrote  his  name 
across  the  bill,  it  M'as  held  inadmissible  for  him  to  show  that 
he  refused  to  write  "  accepted,"  for  the  name  alone  imported 

f>i  Daniel  on  Negotiable  Instruments.  §  496. 

M/H  re  Armstronnr,  41  Fed.  ."iSi ;  First  Nat.  Bank  v.  Clark,  01  Md. 
401  ;    Nevada   Bank  v.  Luce,   130  :Mass.  488. 

53Molson"s  Bank  v.  Howard.  8  Jones  &  S.  15. 

^H'ost,   §    301. 

f'SPliilips  V.  Frist,  1!)  Me.  77;  Barnet  v.  Smith,  10  Fost.  25G ;  Story 
on  Bills,  §  243;  Ward  v.  Allen.  2  Mete.  (Mass.)  53;  1  Parsons  on 
Notes  and  Bills,  243;  Harper  v.  West,  1  Cr.  C.  C.  192;  Spear  v.  Pratt. 
2  Hill,  582;   :\riller  v.  Butler.   1   Cr.  C.  C.   170. 

5«Cook  V.  Baldwin.   120  Mass.  :J17. 


190  ACCKi'TA.NCE.  §§  2UU,  300. 

it.^^  But  merely  paying  and  crediting  a  part  of  the  amount 
on  the  bill  would  not  amount  to  an  acceptance  in  writing.^** 

§  299.  Implied  acceptance. —  Acceptance  may  be  implied 
from  the  conduct  of  the  drawee.  Any  act  which  clearly 
indicates  an  intention  to  comply  with  the  request  of  the 
drawer,  or  any  conduct  of  the  drawee  (no  statute  interven- 
ing) from  which  the  holder  is  jiistiiied  in  drawing  the  con- 
clusion that  the  drawee  intended  to  accept  the  bill,  and 
intended  to  be  so  understood,  will  be  regarded  as  an  accept- 
ance.^" Keeping  a  bill  a  considerable  length  of  time  without 
returning  an  answer,  may,  under  some  circumstances,  be 
considered  as  an  acceptance,  especially  if  the  drawee  be  in- 
formed that  delay  will  be  so  considered,  and  there  be  an 
inference  from  the  language  of  the  drawee  that  he  intended 
an  acceptance.*^'  But  the  mere  detention  for  an  unreason- 
able time,  unattended  by  special  circumstances,  will  not,  in 
law,  amount  to  an  acceptance.''^ 

In  an  English  case  Lord  Ellenborough  expressed  the 
opinion  that  destruction  of  the  bill  by  the  drawee  w^ould 
constitute  an  implied  acceptance,  especially  if  the  draw^ee 
had  not  previously  refused  to  accept.*^-  The  correctness  of 
this  doctrine  is  doubted  by  eminent  text-writers,®^  and  it  does 
not  seem  to  be  consonant  with  sound  principle.  There  is 
a  statute  in  Xew  York  w^hich  in  substance  provides  that 
if  tlu'  drawee  destroy  the  bill,  or  refuse  within  twenty-four 
hours  after  its  delivery  to  him  to  return  the  bill,  such  con- 
duct sliall  be  deemed  an  acceptance.''^ 

§  300.  Verbal  acceptance. —  As  has  been  seen,  the  law  mer- 
chant, unaffected  by  statute,  permits  a  verbal  acceptance, 

•'"'"  Kaufman  v.   Barrenger,  70  La.  Ann.  419. 

MBassett  v.  Haines,  9  Cal.  2G1. 

MAndrcssen  v.  First  Nat.  Bank,  2  Fed.  12.5;  Billing  v.  De  Vaux,  .3 
M.  &  G.  .505:   MeCutcheon  v.  Rice,  56  Miss.  455. 

COChitty  on  Bills  [*2n5],  334;  Harvey  v.  Martin,   1  Canipb.  425. 

61  Mason  v.  BarfF,  2  B.  &  Aid.  20;  Colorado  Nat.  Bank  v.  Boettcher, 
5  Colo.    190. 

«2  .Jeune  v.  Ward,  1  B.  &  Aid.  653. 

caChitty  on  Bills    [*296],  335;    Edwards  on  Bills,  418. 

€4R.  S.,  S   11    (2d  ed.),  p.  757. 


§  300.  FORM    AXI)    VARIETIES    OF    ACCEPTANCE.  UH 

and  it  is  as  l)iii(ling-  upon  the  drawee  as  a  written  accept- 
ance; but  the  hdhlor  may  always  insist  upon  ;i  written  ac- 
ceptance, and  in  default  thereof  treat  the  bill  as  dishon- 
ored."^ Any  words  used  by  the  drawee  to  the  drawer  or 
holder,  which  by  reasonable  intendment  signify  that  he  hon- 
ors the  bill,  will  amount  to  such  acceptance;  though  it  would 
bo  different  if  the  words  were  addressed  to  a  stranger  hav- 
ing no  interest  in  the  bill.  Thus,  where  a  foreign  bill 
drawT^i  on  dofeii(huit  was  i)rotested  by  nonacceptance  and 
returned,  and  afterwards  the  drawee  told  the  plaintiff,  "  If 
the  bill  comes  back  I  will  pay  it,"  was  held  an  acceptance.** 
So,  if  the  drawee  say,  "  Leave  your  bill  with  mo,  and  1  will 
accept  it."  ^^  So,  where  the  holder  met  in  the  street  the 
drawee  of  the  bill  which  had  been  sent  to  his  counting- 
house,  and  returned  unaccepted,  and  the  <Irawee  said,  "  If 
you  will  send  it  to  the  counting-house  again,  I  will  give 
directions  for  its  being  accepted,"  Lord  Ellenborougli  held 
that  if  the  bill  had  been  sent  accordingly,  it  would  operate 
as  an  acceptance,  but  otherAvise  not,  the  words  being  con- 
ditional.*'* The  words  used,  therefore,  must  evince  a  clear 
intention  on  the  part  of  the  drawee  to  bind  himself  to  the 
payment  of  the  bill  at  all  events,  in  order  to  amount  to  an 
acceptance,  and  equivocal  language  will  not  suffice.  There- 
fore, where  the  drawee  said,  on  the  day  after  presentment 
for  acceptance,  when  the  plaintiff's  clerk  called  for  the  bill, 
'^  There  is  your  bill,  it  is  all  right,"  it  was  held  no  accept- 
ance.^^ It  should  be  added  that,  in  order  to  amount  to  a 
verbal  acceptance,  the  words  used  must  lie  addressed  to  the 
drawer  or  holder,  or  their  agent,  or  to  some  one  who  takes 
the  bill  on  the  faith  and  credit  imparted  by  the  words  used.^** 

osChitty  on  Bills  [*287],  326;   Edwards  on  Bills,  417. 
66  Cox  V.  Coleman,  Chitty,  Jr.,  on  Bills,  274. 
67Chitty,  Jr.,  on  Bills,   12. 
6S  Anderson  v.  Hick,  3  Canipb.   179. 
69  Powell  V.  Jones,  1  Esp.  17. 

v<»  Daniel  on  Negotiable  Instruments,  §  507 ;  ^lartin  v.  Bacon.  2  S.  C. 
132. 


102  ACCEPTANCE.  §  301. 

§  301.  statutory   rule   as  to   written   acceptance. —  In   the 
Year  1821  it  ^vas  enacted  in  England,  by  tlie  statute  1  &  2 
Geo. IV., chap.  78,  §  2,  that  "no  accei)tance  shall  be  sufficient 
to  charge  any  person,  unless  such  acceptance  be  in  writing 
on  such  bill."     Since  that  statute  it  has  been  laid  down  by 
high  authority  that  a  mere  signature  on  the  face  of  the 
bill,  without  any  words  of  acceptance,  may  be  an  acce})tance 
in  writing  within  the  meaning  of  the  statute  ;^^  and,  on  the 
other  hand,  that  words  of  acceptance  without  a  signature, 
if  intended  as  an  acceptance,  might  suffice.'^     By  statute 
19  &  20  Victoria,  chap.  78,  §  2,  it  was  enacted  "  that  no  ac- 
ceptance of  any  bill  of  exchange  shall  be  sufficient  to  bind 
or  charge  any  person,  unless  the  same  be  in  writing  on  such 
bill,  and  sigiied  by  the  acceptor  or  some  person  duly  au- 
thorized by  him."      After  this  enactment  it  was  contended 
that  inasmuch  as  before  its  passage  a  mere  signature  was 
deemed  an  acceptance  in  writing  —  -svithin  the  statute  1  &  2 
Geo.  IV.,  it  was  still  not  the  less  so;  and  that  inasmuch  as 
it  was  a  signature  of  the  acceptor,  the  bill  was  both  accepted 
in  writing,  and  signed  by  the  acceptor  -within  the  meaning 
of  the  statute  19  &  20  Victoria.     But  looking  at  the  his- 
toi-y   of  the   statute.    Lord   Denman   was   of   the  contrary 
opinion ;  and  the  inere  signature  was  held  not  to  amount  to 
an  acceptance  under  the  later  statute."^    The  decision,  how- 
ever, was  inmiediately  nullified  by  act  of  Parliament.^^    Un- 
der a  similar  statute  in  ISTew  York,  to  that  of  19  &  20  Vic- 
toria, the  mere  signature  of  the  drawee  was  deemed  a  suffi- 
cient acceptance."^     In  many  of  the  United  States  statutes 
have  been  enacted  which  expressly  require  that  all  accept- 
ances shall  be  in  writing,  and  in  most  of  these  States  the 
written  acceptance  is  required  to  be  signed  by  the  acceptor. 

71  Byles  on  Bills    (12th  pel.),   101;   Leslie  v.  Hastings,   1  Moody  &  R. 
110. 

72  Dufaur  v.  Oxondon,  1  Moody  &  R.  90. 
7.".  Hindlaufrh  v.  Blakey,  .3  C.  P.  Div.  136. 

74  See  Steele  v.  McKinlay,  34  Eng.  Rep.   106. 
7ri  Spear  v.  Pratt,  2  Hill.  .582. 


§§  oOii-oOi,      louM    AMi   vai;ii:t:ks  of  accki- ianck.        1'.';) 

§  302.  Acceptance  on  separate  paper. —  There  is  no  JouLt 
that,  in  the  aUeuce  of  statutory  interdiction,  an  acceptanee 
may  be  upon  a  separate  paper,  as  in  a  letter,  for  instance, 
as  Veil  as  upon  the  hill  itself.  Thus,  a  wiitten  promise  to 
accept  an  existing  hill,  or  -  that  it  shall  meet  with  due 
honor;''  or  that  the  drawee  "will  accei)t  or  cerlainiy  pay 
it "  —  or  any  other  ecpiivalent  language,  has  i)een  hcdd  to 
amount  to  acceptance.'"     But  if  the  langaiage  be  equivocal 

if  it  be  merelv  stated,  "  your  bill  shall  have  attention  "  — 

it  is  insufficient."      Promises  to   accept  are  hereafter  con- 
sidered.'^ 

i^  303.  Written  and  verbal  promises  to  accept  existing  and 
nonexisting  bills.—  A  written  i)romise  to  the  drawer  to  ac- 
cept an  existing  or  nonexisting  bill  which  is  communicated 
to  a  tliird  party,  and  induces  him  to  taJce  the  bill  upon  the 
credit  thereby  excited,  is  undoubtedly,  by  the  decisions  in 
England  and  in  the  United  States,  the  same  as  an  actual  ac- 
cep'tance.'"  But  where  such  promise  was  not  communicated 
to  the  holder,  and  therefore  did  not  enter  into  the  induce- 
ment to  take  the  bill,  the  decisions  are  in  a  condition  of  in- 
extricable confusion.*"''  If  the  promise  to  accept  be  verbal, 
and  the  bill  in  existence,  and  the  promise  is  communicated 

81 

to  the  holder,  such  promise  will  amount  to  an  acceptance, 
but  if  the  promise  be  made  to  accept  a  nonexisting  bill,  the 
better  view  is  that  it  will  not  amount  to  an  acceptance.^^" 

§  304.  What  requisite  to  make  promise  to  accept  nonexist- 
ing bill  amount  to  acceptance.—  In  order  that  the  promise 
to  accept  a  nonexisting  bill  shall  amount  to  acceptance,  there 
are  two  indispensable  requisites:     First  that  it  should  be 

76]\rcEvers  v.  Mason,  10  Johns.  207;  Greele  v.  Parker,  5  Wend.  414; 
Billinf?  V.  De  Vaux.  3  M.  &  G.  565. 
TTRees  v.  Warwick.  2  B.  &  Aid.  113. 
'8  Post.  §§  .303-305. 

79  Daniel  on  Xefjotiablo  Instrumonts.  §§  5.50.  551,  and  cases  cited. 

80  Daniel  on  Negotiable  Instruments,  §§  552-554.  and  cases  cited. 

81  .Johnson  v.  CoUings,   1   East.  98. 

82  Bank  of  Ireland  v.  Archer,  11  M.  &  W.  383:  Kennedy  v.  Geddes.  8 
Port.  268. 

13 


194  ACCErTANCE.  §§  305,  306. 

written  witliin  a  reasonable  time  before  the  bill  is  drawn, 
for  otbennsc  the  drawer  will  be  presnmed  to  have  declined 
to  act  on  the  anthority  granted  him  to  draw,  and  the  drawee 
will  not  be  constrned  to  have  intended  an  indefinite  liability.**^ 
And  second,  the  promise  mnst  so  describe  the  bill  that  there 
can  be  no  doubt  of  its  application  to  it.**'*  High  authorities 
go  further,  and  declare  that  the  promise  must  put  its  finger, 
so  to  speak,  upon  the  specific  bill;  and  that  othenvise,  if 
the  promise  be  broken,  the  promisor  may  be  sued  by  the 
drawer  for  breach  of  promise  to  accept;  but  cannot  be  sued 
by  anyone  as  acceptor.^^ 

^  305.  To  what  bills  promises  to  accept  are  applicable. — 
The  rule  that  the  promise  to  accept,  designating  the  specific 
bill,  amounts  to  an  acceptance,  seems  applicable  only  to  the 
cases  of  bills  payable  on  demand,  or  at  a  fixed  time  after 
date,  and  not  to  bills  payable  at  or  after  sight ;  for,  in  order 
to  constitute  an  acceptance  in  the  latter  cases,  a  presentment 
is  indispensable,  since  the  time  that  the  bill  is  to  run  cannot 
be  otherwise  ascertained.^^  And  a  mere  promise  to  accept 
without  more,  it  is  thought,  applies  only  to  bills  payable  at 
the  drawee's  or  payee's  place  of  business. ^^ 

^  306.  Absolute  and  conditional  acceptances;  rights  of 
holder  as  to. —  It  is  the  right  of  tlie  holder  of  the  bill  to  re- 
quire an  absolute  and  unconditional  acceptance  —  that  is, 
an  acceptance  in  conformity  with  the  tenor  of  the  bill  — 
and  may  cause  it  to  be  protested  unless  it  be  so  accepted.^^ 
The  holder  may,  however,  at  his  risk,  take  a  conditional, 
varying,  or  (jualified  acceptance,  and  in  such  cases  the  ac- 
ceptor will,  if  the  condition  be  complied  with,  or  the  quali- 
fication admitted,  be  bound  thereby;   and  tlie  holder  aWII 

SSCoolidpo  V.   Payson.  2  Wheat.  66;   Greele  v.   Parker,  5  Wend.  414. 
84  Franklin  Bank  v.  Lynch.  ,52  Md.   270. 

S5Coolidfre  v.  Payson,  2  Wheat.  66:  Boyce  v.  Edwards.  4  Pet.  Ill; 
Sehiniinelpennich  v.  Bayard,   1   Pet.   264. 

86  Wildes  V.  Savage,  1  Story  C.  C.  28;  Franklin  Bank  v.  Lynch.  .^2 
Md.  270. 

87  Michigan  State  Bank  v.  Leavenworth.  28  Vt.  209. 

88Boehm  v.  Oarcias.  1  Camph.  42.5:  Parker  v.  Gordon,  7  East.  38.5; 
Gibson  v.  Smith.  76  Ga.  34. 


,^  307.  FOKM     AND     VAKIKTIKS    OK    AtCKT'lANCK.  l'J5 

likewise  In-  Ixmnd  liy  it.'*'''  The  Ijiirdeu  of  proof  i<  on  the 
pLiiiitiff  to  show  j)erf<)niiance  of  the  condition  of  a  con- 
ditional acceptance;'"'*'  and  ahhou^h  absohite  then  it  shoidd 
be  set  out  as  conditional,  with  an  avci-nient  of  jx-rfonnance.'" 

On  the  offer  of  a  conditional  or  varying  acceptance,  if 
the  holder  resolve  to  reject  it  altogether,  he  may  protest 
generally,  or  give  general  notice  of  nonacceptance;  iMit  if 
he  is  willing  to  acce])t  the  offer,  he  should  then  give  notice 
of  its  exact  tenns  to  all  the  parties,  and  state  his  readiness  to 
accept  the  offer  if  they  will  respectively  consent.^^  A  gen- 
eral or  unqnalitied  protest  or  notice  of  nonacceptance  wonhl, 
in  snch  a  case,  evince  that  the  holder  did  not  acquiesce  in 
the  oiTer,  and  preclude  him  from  afterward  availing  him- 
self of  it;''"^  bnt  not  if  he  was  not  aware  of  the  acceptance 
when  he  caused  the  bill  to  be  noted  or  protested  for  non- 
acceptance.^ 

§  307.  Qualification  of  rule. —  The  mle  above  stated  is,  in 
respect  to  the  indorsers  of  a  bill,  of  absolute  and  invariable 
application.""'  But  in  respect  to  the  drawer,  it  is  subject  to 
qualification.  The  drawer  warrants  that  the  drawee  is  in 
funds,  and  that  he  Avill  accept  and  pay  the  bill.  And  he  is 
bound  to  know  whether  or  not  the  drawee  is  in  funds. 
Therefore,  when  he  draws  ^vithout  having  a  right  to  do  so, 
he  is  not  entitled  to  notice  of  dishonor.  And  upon  the  same 
principle  it  is  thought  that  he  cannot  be  injured,  and  will 
not  be  discharged  by  the  holder's  taking  a  qualified  accept- 
ance payable  at  a  future  day.^**  True,  such  an  acceptance  is 
a  departure  from  the  tenor  of  the  l)ill;  but  the  drawer,  hav- 
ing improperly  drawn  the  bill,  cannot  complain  of  the  holder 

89  Anderson  v.  Hick,  3  Canipb.  170:  Taylor  v.  Xewman.  77  ^fo.  2G5 ; 
Huprhes  V.  Fisher.   10  Colo.   .38,3. 

{"•Read  V.  Wilkin-^on.  2  Wash.  C.  C.  .lU:  First  Xat.  RaTik  v.  Bensley, 
1    Fed.  009. 

i'l  Lanjjston  v.  Corney.  4  Campb.  170. 

!»2  Daniel  on  Xepotiable  Tnstnimrnts,  §  .'ilO:  Chitty  on  Rills  [*301], 
340. 

93  Sproat  V.  Mathews,   1  T.  R.   182. 

94  Fail-lie  v.  Herrinp.  3  Bing.  625. 
9.-.  Fdwards    on  Bills.  428.  430. 

9'!  Walker  v.  Bank  of  Xew  York,  13  Barb.  030;  Fdwards  on  BilN.  420. 


15)0  ACCErTAXCE,  §  ^08. 

for  taking  those  steps  which  seem  essential  to  prevent  its 
entire  dishonor,   and  to  secure  its  payment."' 

^  308.  Illustrations  of  conditional  acceptance. — Acceptances 
"  to  pay  as  remitted  for;'"   -  to  pay  when  in  cash  for  the 
cargo  of  the  sliip  Thetis;"  ''  to  pay  when  goods  consigiied 
to  me  are  sokl;"  "to  pay  when  a  cargo  of  equal  value  is 
consigned  to  me;"  "  payahle  when  house  is  ready  for  occu- 
pancv;"    *"  to   pay   when    in   funds/'    are   examples   of   con- 
ditional  acceptances.^      An   acceptance   to   pay   "when   in 
funds  "  renders  the  drawee  liable  only  when  he  has  funds  ;^^ 
although  it  has  been  held  that  this  implied  when  the  drawee 
has  funds  which  the  draw^er  has  a  present  right  to  demand 
and  receive,  and  that  it  did  not  apply  to  wages  for  daily 
labor  earned  after  acceptance,  and  needed  for  the  daily  sub- 
sistence of  the  laborer.^     "  When  in  funds  "  means  "  when 
in  cash,"  and  available  securities  wall  not  answer  this  con- 
dition until  actually  converted  into  money."     If  the  funds 
are  not  received  in  the  acceptor's  lifetime,  but  are  collected 
by  the  administrator,  the  latter  is  liable  as  representative  of 
tiie    deceased,"   but  the   condition   of  the   word   ''  adminis- 
trator "  to  an  acceptance  does  not  make  it  a  conditional  one, 
nor  qualify  his  liability.*     If  the  holder  receive  an  accept- 
ance to  be  paid  "  wdien  in  funds,"  he  cannot  resort  to  the 
drawer   until   the   acceptor   refuses   to   pay   after   he   is   in 
funds ;^'  and  the  conditional  acceptor  vdW  not  be  liable  if  the 
funds  are  intercepted,  or  compliance  with  the  condition  is 
prevented,  l)y  o])eration  of  law.^ 

07  Edwards  on  Bills.  429. 

OS  Banbury  v.  Lissett,  2  Stra.  1211;  Julian  v.  Shorbrook,  2  Wills,  9; 
Smith  V.  Abbott,  2  Stra.  1152;  Mason  v.  Hunt,  2  Doug.  297;  Cook  v. 
Wolfendale,   105  Mass.  401;   Marshall  v.  Clary,  44  Ga.  513. 

!»f»  :\Iarshall  v.  Clary,  44  Ga.  51.3. 

1  Wintermute  v.  Post,  4  Zabr.  420. 

2  Campbell  v.   Pettengill,   7  Greonl.   120. 

3Swansey  v.   Brook,    10  Ala.   533;    Gallery  v.    Prindlo,    14   Barb.    186. 

4  Tassey  v.  Church,  4  Watts  &  S.  34fi. 

5  Campbell  v.  Pettcngill.  7  Greonl.   120;  Gallery  v.  Prindle,  14  Barb. 
180. 

0  Browne  v.   Coit,   1   McCord,  408. 


§§  309,  ;nO.      i()i;.\i   AMI  vAi;iKTii:s  of  acckptaxck.        197 

Where  tlie  acceptance  is  to  pay  out  of  the  first  money 
received,  tlic  acceptor  is  bound  to  pay  from  time  to  time, 
on  reasonable  rcMpiest,  such  funds  as  he  receives  from  the 
drawer;  and  a  judgment  for  a  certain  smn  which  he  received 
is  no  bar  to  another  action  for  a  sum  subsequently  received."^ 
§  309.  As  to  qualified  acceptances. —  As  an  acceptance-  may 
vary  fr(uu  the  tenor  of  the  order  by  introducing  a  condition, 
so  it  may  vary  from  it  as  to  the  sum,  time,  place,  or  mode  <.f 
paynumt.^  Such  an  acceptance  is  generally  called  a  quali- 
fied acceptance,  and  the  same  principles  govern  it  as  govern 
a  conditional  acceptance. 

By  receiving  such  qualified  acceptance  the  holder  dis- 
charges all  antecedent  parties,  unless  he  obtains  their  con- 
sent." Thus,  if  the  bill  be  addressed  to  the  drawees  at  their 
place  of  residence,  and  it  is  accepted,  payable  at  a  different 
town,  it  is  a  nuiterial  variation  if  the  holder  receives  it,  and 
does  not  i)rotest  for  nonacceptance;^"  but  a  bill  addressed 
generallv  to  the  drawee,  in  a  city,  may  be  accepted,  payable 
at  a  particular  bank  in  the  city.^^  If  the  drawee  accept  to 
pay  at  a  certain  future  day,  different  from  that  named  in 
the  draft,  and  the  holder  receives  such  acceptance,  it  will 
bear  grace  like  all  engagements  by  negotiable  paper  to  pay 
at  a  certain  time.^^ 

As  has  been  stated,  an  acceptance  payable  at  a  particular 
place  does  not  constitute  a  qualified  acceptance,  but  the  rule 
is  otherwise  if  the  acceptance  specifies  as  the  place  of  pay- 
ment a  particular  place  "  only,  and  not  othen\ase  or  else- 
where." 

g  310.  Conditions  to  written  and  verbal  acceptances. —  If 
any  (-(mditions  are  annexed  to  a  written  acceptance,  they 

7  Perry  v.  Harrington,  2  Mete.    (Mass.)    368. 

SBylc's  on  Bills  [*180],  .31();  Chitty  on  Bills  [*2031,  342;  Vanstrum 
V.  Liljengren,  37  Minn.  191. 

9Byles  on  Bills  [*18(5].  310;  Sebag  v.  Abithol,  4  Maule  &  S.  402; 
Gibson  v.  Smith,  75  Ga.  33. 

10  Niagara   Bank  v.   Fairman  County,   31   Barb.  403. 

11  Troy  City  Bank  v.  Launian,  19  N.  Y.  477;  Meyers  v.  Standart,  19 
Ohio    (N.   S.),  29. 

12  Green  v.  Raymond,  9  Nebr.  295. 


IDS  ACCEl'TA^CE.  §  310. 

should  appear  on  its  face.  It  has  been  laid  down  that  ac- 
ceptance may  be  rendered  conditional  by  another  contem- 
poraneous writing/^  but  such  condition  could  have  no  effect 
against  a  bona  fide  holder  ignorant  of  it.^^  The  terms  of  an 
acceptance  in  writing  cannot  be  varied  by  any  contempora- 
neous parol  agreement,  as  that  is  against  the  first  principles 
of  the  law  of  evidence.^^  Where  a  verbal  acceptance  is  com- 
petent, a  condition  annexed  to  a  verbal  acceptance  may  be 
shown,  because  it  does  not  vary  or  contradict  the  contract, 
but  shows  what  the  contract  was.^*^  But  the  acceptor  having 
one  accepted  absolutely,  cannot  by  subsequent  declarations 
annex  a  condition  to  his  liability.^^ 

13  Bowerbank  v.  Monteiro,  4  Taunt.  884. 

14 United   States   v.    Bank   of   Metropolis.    To    Pet.    377;    Montaj^ue   v. 
Perkins,  22  Eng.  L.  &  Eq.  .^Ifj. 

15  Adams  v.  Wordley,    1   M.   &  W.   347:   Goodwin  v.  McCoy,    13  Ala. 
271:  Foster  v.  Clifford,  44  Wis.  .5fi9. 

16  Edwards  on  Bills,  426. 

1"  Wells  V.  Brigham,  6  Cush.  G. 


CHAPTER  XI. 

PRESENTflENT  FOR  PAYMENT. 

§  311.  Obligations  of  maker,  acceptor,  drawer,  and  indorser, 
respectively,  as  to  payment;  general  rule. — The  engagement 
entered  into  by  the  acceptor  of  a  bill  and  the  maker  of  a 
note  is,  that  it  shall  bo  paid  at  its  maturity  —  that  is,  on 
the  (hiy  that  it  falls  due,  and  at  the  place  specified  for  pay- 
ment, if  any  place  be  designated  —  upon  its  presentment. 
This  engagement  is  absolute,  but  that  of  the  drawer  of  a 
bill  and  the  indorser  of  a  bill  or  note  is  conditional,  and  con- 
tingent upon  the  true  presentment  at  maturity,  and  notice 
in  case  it  is  not  paid.  The  maker  and  acceptor  are  bound, 
although  the  bill  or  note  be  not  ])resented  on  the  day  it  falls 
due;^  but  the  drawer  and  indorsers  are  discharged  if  such 
presentment  be  not  made,  unless  some  sufHeient  cause  ex- 
cuses the  holder  for  failure  to  perform  that  duty.^  It  is 
important,  therefore,  to  ascertain  how  the  presentment 
shoidd  be  provided  for  by  the  holder  of  the  bill  or  note,  lest 
by  failure  to  observe  the  necessary  precautions,  the  drav.er 
and  indorsers  may  be  discharged,  and  the  solvency  of  his 
debt  destroyed  or  impaired.  We  shall  consider,  therefore, 
in  order: 

(1)  The  person  by  and  to  whom  the  instrument  should  be 
presented. 

(2)  The  time  of  presentment. 

(3)  I'he  place  of   presentment. 

(4)  The  mode  of  presentment. 

1  Sims  V.  National  Com.  Bank,  73  Ala.  2.31. 

2  Magnidor  v.  Bank  of  Washington.  3  Pet.  92:  Cox  v.  National   I'.ank, 
100  U.  S.  712;  Harvey  v.  Girard  Nat.  Bank,  119  Pa.  St.  21-2. 

[199] 


200  PKESENTMEXT  FOU  PAYMENT.  §  312. 

SECTION  I. 

BY  AND  TO   WHOM    THE   INSTRUMENT   SHOULD   BE   PRESENTED. 

§  312.  By  whom. —  Any  hona  fide  holder  of  a  negotiable  in- 
strmnent,  or  aiivone  lawfully  in  possession  of  it  for  the 
purpose  of  receiving  ])ayment,  may  present  it  for  })aynient 
at  maturity/'  A  notary  public,  or  any  agent  duly  authorized, 
may  make  })resentment  of  the  instrument  for  Y)aynient;  and 
it  is  well  settled  that  this  authority  need  not  be  in  writing.'* 

The  mere  possession  of  a  negotiable  instrument  which  is 
payable  to  the  order  of  the  payee,  and  is  indorsed  by  him 
in  blank,  or  of  a  negotiable  instrument  payable  to  bearer, 
is  in  itself  sufficient  evidence  of  his  right  to  present  it,  and 
to  demand  payment  thereof.^  And  payment  to  such  person 
will  always  be  valid,  unless  he  is  known  to  the  payor  to  have 
acquired  possession  wrongfully.  And  if  the  party  holding 
possession  of  a  negotiable  instrument  which  is  not  indorsed  by 
the  payee,  or  has  been  indorsed  by  him  specially,  to  another, 
and  has  not  been  indorsed  over  by  such  indorsee  but  has 
been  placed  in  the  holder's  hands  as  agent,  for  the  purpose 
of  receiving  payment,  such  agent  may  present  it  for  pay- 
ment, and  payment  to  him  will  be  valid ;  even,  as  it  has  been 
held,  although  made  in  a  manner  different  from  that  pro- 
vided for  in  the  instructions  to  the  agent.  The  fact  that 
the  instrument  is  not  indorsed  by  the  owner  is,  as  has  been 
held,  under  such  circumstances,  of  no  importance.  Such 
indorsement  would  be  necessary  to  the  negotiation  of  the 
instrument,  but  would  not  be  necessary  to  the  validity  of  the 
payment. 

As  has  been  indicated,  the  presentment  may  be  made  l)y 
the  holder  or  owner  himself,  or  by  his  duly  authorized  agent, 
and  his  authority  need  not  be  in  writing,  although  possibly 
the  maker  or  acceptor  may  insist  upon  a  written  authori- 

-  Leftly  V.  Mills,  4  T.  E.  170;  Baohellor  v.  Priest,  12  Pick.  399. 

4  Bank  of  Utioa  v.  Smith,  18  Johns.  2.30;  Hartford  Bank  v.  Barry, 
17  Mass.  94. 

5  Weber  v.  Orton,  91   Mo.  fiSO;  -Tackson  v.  Love.  82  N.  C.  405. 


§§  3i;},  :'>14.  BY      AM)    TO     WHOM     MADE. 


201 


zatiou  or  in.lorseiiieiit  to  the  a-cut  hdoiv  hoing  rcniin;.!  iu 
make  payment.'' 

§313.  Possession  of  unindorsed  instrument. —  When,  how- 
ever, a  bill  or  note  uniiidorsea  hy  the  payee,  or  indorsed  l.y 
the  payee  specially,  aii-l  iiniii.ld-cl  l.y  his  indorsee,  i>  in 
the  possession  of  another  person,  the  (piestion  whether  or 
not  its  bare  possession  is  evidence  of  his  right  to  demand 
payment,  is  of  a  different  character.  Withont  the  indorse- 
ment of  the  payee  or  special  indorsee,  such  possession  would 
clearly  not  entitle  the  holder  to  the  privileges  of  a  bona  fide 
holder  for  value,  as  at  best  he  would  only  hold  the  equitable 
title  to  the  instrument,  and  could  not  sue  at  law  upon  it  as 
a  ground  of  action."  If,  however,  the  holder  have  and  ex- 
hibit extraneous  evidence  of  his  OA^mership  of  the  instni- 
ment,  such,  for  instance,  as  an  assigiimout  and  mortgage 
duly  executed,  this  will  suffice  ^nthout  in<l()r>(Miicnt,  and 
the  party  to  whom  it  is  presented  would  then  have  no  right 
to  insist  on  an  indorsement. * 

§  314.  Presentment  by  indorser. —  AVhether  or  not  an  in- 
dorser  of  a  bill  or  note  which  has  upon  it  a  subsequent 
special  indorsement,  and  no  prior  indorsement  in  blank,  is 
shown  by  mere  possession  of  the  paper  to  be  entitled  to 
demand  payment,  has  been  much  questioned.  There  are  a 
number  of  cases  which  hold  that  such  an  indorser  cannot 
demand  payment,  for  the  reason  that  it  would  seem  from 
the  face  of  the  paper  itself  that  he  had  parted  with  his  title; 
and  that  a  receipt  from  the  last  indorsee,  or  a  reindorse- 
ment  to  him,  would  be  necessary  to  re-establish  it.  This 
doctrine  was  laid  down  in  an  early  case  by  the  Supreme 
Court  of  the  United  States,^  and  some  of  the  State  tribunals 
have  taken  the  same  \aew;^^  but  in  a  more  recent  case  the 

•'•Tiedeman  on  Bills  and  Notes,  311.  note  2. 

"Hull  V.  Conover,  35  Ind.  372:  Portern  v.  Cnshnian.  10  111.  572:  Baiis- 
niann  v.  Keller,  38  ^linn.  205. 

8  Pease  v.  Warren.  25  'Mich.  0:  Daniel  on  Xepotialile  lnstiuin(>nt>;, 
§S  574.  575. 

'•'Welch  V.   Liiidn.   7   Craneh.   150. 

10  Thompson  v.  Flower,  13  Mart.  301:  Spripp  v.  Cuny,  10  Mart.  253; 
Dehers  v.  Harriott,  1  Show.  1G3. 


:.'():_'  PRESENTMENT    FOR    PAYMENT.  §  315. 

ISupreme  Court  of  the  I'liited  States  expressed  the  opposite 
<t})iiiion,  which  seeiiiti  to  us  the  correct  oiie.^^  Some  of  the 
(•uses  hokl  that  possession  of  the  bill  by  a  prior  iiulorser  is 
sufficient  where  the  subsequent  indorsements  are  cancelled  ;^^ 
l)ut  the  better  view  seems  to  be,  and  it  is  sustained  by  most 
respectable  authority,  that  it  makes  no  difference  that  the 
subsequent  indorsements  remain  uncancelled.^^  The  party 
luav  not  be  still  the  proprietor  in  interest  of  the  instrument, 
but  his  possession  of  it  would  be  prnnia  facie  evidence  that 
he  had  paid  it  himself  to  a  subsequent  indorsee,  and  had 
reacquired  the  right  to  demand  payment.  And  it  would 
also  be  consistent  with  the  idea  that  he  was  holding  it  and 
suing  for  the  benefit  of  a  subsequent  indorsee. ^^ 

i<  315.  When  holder  is  dead. —  If  the  holder  die  before  the 
time  for  presentment  for  payment,  it  must  be  made  by  his 
personal  representative.^^  If  there  be  no  personal  repre- 
sentative at  the  time,  presentment  and  demand  within  a 
reasonable  time  after  liis  appointment  will  be  sufficient  to 
charge  subsequent  parties,  although  presentment  and  de- 
mand were  not  made  at  maturity.^*' 

If  the  holder's  estate  has  passed  to  an  assignee  in  bank- 
ruptcy, the  assignee,  or  some  person  authorized  by  him, 
should   make  presentment.^^ 

If  the  holder  is  a  feme  sole,  and  she  has  become  a  married 
woman  at  maturity,  the  presentment  should  be  made  by  her 
husband;  and  a  presentment  by  her,  Avithout  liis  consent  or 
authority,  would  be  insufficient  to  charge  the  maker,  or 
validate  a  payment.     If  the  note  belonged  to  a  partnership, 

11  Diifjan  V.  United  States,  3  Wheat.  172. 

isj'.ank  of  Utica  v.  Smith,  18  Johns.  230;  Bowie  v.  Diivall,  1  fiill  &  J. 
175;  Chautauqua  County  Bank  v.  Davis,  21  Wend.  584. 

iSDugan  V.  United  States,  3  Wheat.  172;  Lonsdale  v.  Brown,  3  Wash. 
C.  C.  404;  Bank  of  Kansas  City  v.  Mills,  24  Kan.  610. 

14  Bank  of  United  States  v.  United  States,  2  How.  711:  Bachellor  v. 
Priest,  12  Pick.  3f)9;  Merz  v.  Kaiser,  20  La.  Ann.  377. 

15]   Parsons  on  Notes  and  Bills,  360;    Stoiy  on  Notes,  §  240. 

l«  White  V.  Stoddard,  11  Cray,  .')28. 

1"!  Parsons  on  Notes  and   Bills.  .360:   Edwards  on  Bills,  494. 


§§3ir»,  317.  KV   Axn  TO  whom   madk.  203 

and  one  member  Ik-  "lead  at  jiuiturity,  piv-ciituicnt  sliouM 
be  made  by  the  survivor.''^ 

§316.  To  whom;  general  rule. —  Presontniont  for  payment 
must  lie  made  to  the  drawee  or  acceptor  of  the  bill,  or  maker 
of  the  note,  or  to  an  authorized  agent.  A  personal  demand 
is  not  necessary,  and  it  is  sutHoient  to  make  the  demand  at 
his  usual  residence  or  phice  of  business  of  his  wife  or  other 
agent ;  for  it  is  the  duty  of  an  acceptor  or  promisor,  if  he  is 
not  present  himself,  to  leave  provision  for  the  payment  of 
his  bills  or  notes. ^® 

There  is  no  doubt  that  a  clerk  found  at  the  counting-room 
of  the  acceptor  or  promisor  is  a  competent  party  for  pre- 
sentment for  payment  to  be  made  to,  without  showing  any 
special  authority  given  him.^*^  But  where  the  protest  stated 
the  mere  fact  of  ])resentment  "  at  the  office  of  the  maker," 
it  ^^dll  be  considered  insufficient,  as  not  showing  that  the 
paper  was  presented  to  party  at  the  office  authorized  to  pay 
or  refuse  payment. ^^  A  demand  upon  the  seiwant  of  the 
owner  ''  who  used  to  pay  money  for  him,"  was  held  suffi- 
cient in  England."^ 

§  317.  Presentment  to  person  on  premises. —  If  presentment 
be  made  at  the  phice  specified  in  the  instiiiment,  or  in  the 
case  of  one  payable  generally  at  the  place  of  business  of 
the  acceptor  or  maker  during  business  hours,  or  at  his  domi- 
cile during  a  reasonable  hour  of  the  day,  it  is  sufficient  if 
it  be  made  to  any  person  to  be  found  upon  the  premises, 
especially  if  the  maker  be  absent  or  inaccessible.^^  Where 
presentment  was  made  to  the  wife  of  the  maker,  she  inform- 
ing the  holder  that  her  husband  was  out  of  town,  it  was  held 

18  Daniel  on  Negotiable  Instruments,  §  578. 

19  Matthews  v.  Haydon,  2  Esp.  .509 ;  Brown  v.  McDermott,  .5  Esp.  26.5. 
30  Bradley  v.  Northern  Bank,  60  Ala.  259;  Stainback  v.  Bank  of  Vir- 
ginia, 11  Gratt.  260. 

21  Nave  V.  Kichardson,  36  Mo.  1.30. 

22  Bank  of  England  v.  Newman,  12  :Mod.  241. 

23  Cromwell  v.  Hynson.  2  Campb.  596:  Phillips  v.  Astberg.  2  Taunt. 
206;  Draper  v.  demons,  4  jNIo.  52. 


20-1:  I'KESKNTMK.NT    i-OK     I'AVMliXT.  §§  318,  311). 

sufficient.^  And  so  it  was  deenied  sntKeient  to  charge  the 
indorser  whi-ri'  tht'  holder  presented  the  bill  to  an  inmate 
of  the  maker's  house,  \vho  was  coming-  out,  and  who  stated 
that  the  acceptor  luid  removed  —  the  hokler  leaving  a  card 
containing  notice  for  the  acceptor  of  the  maturity  of  the 
hilL"^'  AVhere  there  is  no  one  to  answer,  presentment  at 
tlie  maker's  dwelling  is  sufficient."" 

§  318.  When  acceptor  or  maker  is  dead. —  If  the  acceptor 
cr  maker  be  dead  at  the  time  of  the  maturity  of  the  bill  or 
note,  it  should  be  presented  to  his  personal  representative, 
if  one  be  appointed,  and  his  place  of  residence  can,  by  reason- 
able inquiries,  be  ascertained.^^  If  there  be  no  personal 
representative,  then  presentment  should  be  made,  and  pay- 
ment demanded,  at  the  dwelling-house  of  the  deceased,  if 
the  instrument  Avere  payable  generally.^^  But  if  it  was 
dra"\ni  payable  at  a  particular  place,  then  it  will  be  sufficient 
that  it  was  presented  at  such  place."'"^ 

§  319.  Where  there  are  several  promisors. —  When  the  note 
is  executed  by  several  joint  promisors  who  are  not  partners, 
but  liable  only  as  joint  and  several  promisors,  it  has  been 
held,  and,  as  we  think,  correctly,  that  presentment  should 
be  made  to  each,  in  order  to  fix  the  liability  of  an  indorser.^'^ 
But  presentment  of  a  bill  dra"wn  upon  or  accepted  by,  and 
of  a  note  executed  by,  a  copartnership  firm,  is  sufficient,  if 
made  to  any  one  of  the  members  of  such  firm.^^    And  if  the 

24:\[oodie  V.  Morrall,  1  Const.  Rep.  367. 

25  Buxton  V.  Jones,  1  M.  &  G.  83;  Stoiy  on  Bills  (Bennett's  ed.), 
§  350,  note  1. 

26  Stivers  v.  Prontiee,  3  B.  Mon.  461. 

27Magruder  v.  Union  Bank,  3  Pet.  87:  .Juniata  Bank  v.  Hale,  16  Serg. 
&  H.  107. 

28]Mafrruder  v.  Union  Bank,  3  Pet.  87:  Juniata  Bank  v.  Hale,  16  Serg. 
&  R.  107;  Story  on  Notes,  §  253. 

29  Boyd's  Admr.  v.  City  Sav.  Bank,  15  Gratt.  501;  Holtz  v.  Boppe,  37 
N.  Y.  634;  Philpot  v.  P.ryant,  1  Moore  &  P.  754. 

30  Blake  v.  McMillen,  33  Iowa,  1.50:  Union  Bank  v.  Willis,  8  Mete. 
(Mass.)   504;  Arnold  v.  Dresser,  8  Allen,  435. 

31  Branch  of  State  Bank  v.  McLeran,  20  Iowa,  306;  Shedd  v.  Brett,  1 
Pick.  401. 


§  320.  TI.MK    OK     I'KKSK.NTMKNT.  205 

signature  of  the  parties  entitled  to  presentment  Le  appar- 
ently that  of  a  i)artnership,  as,  for  instance,  if  signed 
*'  Waller  iS:;  Burr,"  presentment  to  either  is  pufficient.^" 

Even  after  the  dissolution  of  the  hrm,  jiresentment  to  any 
one  of  the  partners  is  sufficient,  for  as  to  the  bill  or  note 
upon  which  they  are  liable,  the  liability  continues  until  duly 
satisfied  or  discharged.""^ 

In  the  event  of  the  death  of  one  of  the  members  of 
the  firm  to  wiiich  presentment  should  be  made  before  the 
maturity  of  the  bill  or  note,  the  presentment  should  be  made 
to  the  survivors,  and  not  to  the  personal  representative  of 
the  deceased,  because  the  liability  devolves  upon  the  sur- 
viving partner.^'*  The  same  rule  obtains  in  the  event  of 
the  death  of  one  of  two  or  more  joint  makers  not  partners.^^ 

SECTIOX  IT. 

TOIE    OF    PRESEXTMEXT. 

§  320.  General  rule  as  to  time. —  In  respect  to  the  maker 
of  a  note  and  the  acceptor  of  a  bill,  it  is  not  important 
upon  what  day  the  presentment  is  made,  provided  it  be 
made  at  some  time  before  the  statute  of  limitations  bars 
action  against  them.^®  In  respect,  however,  to  the  drawer 
of  a  bill  and  the  indorser  of  a  bill  or  note,  it  is  essential  to 
the  fixing  of  their  liability  that  the  presentment  should  be 
made  on  the  day  of  maturity,  provided  it  is  within  the  power 
of  the  holder  to  make  it.""'^  If  the  presentment  be  made  before 
the  bill  or  note  is  due,  it  is  entirely  premature  and  nugatory, 
and,  so  far  as  it  affects  the  drawer  or  indorser,  a  perfect 
nullity.^^     And  if  it  be  made  after  the  day  of  maturity,  it 

32  Erwin  v.  Downs,  15  N.  Y.  375. 

33  Crowley  v.  Barry,  4  Gill.  194;   Hubbard  v.  Matthews,  54  X.  Y.  50. 

34  Cayuga  Bank  v.  Hunt,  2  Hill,  G35 ;   Story  on  Bills,  §§  346-3G2. 

35  Daniel  on  Negotiable  Instruments,  §  596. 

36Chitty  on  Bills  [•3.54],  396:  Metzger  v.  Waddell,  1  X.  Mex.  409. 

3"  1  Parsons  on  Xotes  and  Bills,  373;  Pendleton  v.  Knickerbocker  Life 
Ins.  Co.,  7  Fed.  170. 

38  Griffin  V.  GofT.  12  .Tohns.  423:  .Jackson  v.  Newton,  S  Watts.  401; 
Fanners'  Bank  v.  Duvall.  7  (;ill  &  J.  78. 


206  PKESEXTMKNT     FOR    PAYMENT.         §§321,322, 

i-an,  as  matter  of  course,  be  of  no  eifect,  as  the  drawer  or 
iiulorser  will  already  have  been  discharged,  nnless  there 
were  sulhcient  legal  excuse  for  the  delay.'^"  The  evidence 
must  be  distinct  as  to  the  promptness  of  the  presentment 
or  the  excuse  for  delay,  as  the  burden  of  proof  is  on  the 
plaintiff.^'^ 

§  321.  Note  payable  in  instalments. —  If  a  note  be  pay- 
able in  instalments,  the  presentment  should  be  made  on 
each  consecutive  instalment  as  it  falls  due,  as  if  it  were  (as 
in  fact  it  is  legally  considered)  a  separate  note  in  itself.**^ 
It  would  be  different,  probably,  if  the  condition  were  an- 
nexed to  the  note  that  upon  failure  to  meet  any  instalment, 
the  whole  should  fall  due,  in  which  case  notice  should  be 
communicated  to  the  drawer  or  indorser  that  the  whole 
sum  was  due,  and  the  holder  looked  to  him  for  payment.^^ 
If  no  time  for  payment  be  named  in  the  bill  or  note  it  is 
payable  on  demand ;^^  and  payable  ''on  demand  at  sight," 
is  equivalent  to  payable  "  at  sight."  ** 

§  322.  At  what  hour  of  the  day  presentment  should  be  made. 
— ■  When  the  bill  or  note  is  made  payable  at  a  bank,  it 
should  be  presented  during  banking  hours,  the  parties  exe- 
cuting their  paper  payable  at  a  particular  plaoe,  being  bound 
by  its  usage;  and  in  such  case  a  presentment  after  banking 
hours  is  sufficient.^^  But  it  is  settled  that  when  a  bill  or 
note  is  payable  at  a  bank,  a  demand  made  at  the  bank  after 
banking  hours,  the  officers  being  there,  and  a  refusal,  the 
cashier  or  teller  stating  that  there  were  no  funds,  is  suffi- 
cient.^*^    But  if  the  instrument  be  payable  generally  "  at 

39  Windliam  Bank  v.  Norton.  22  Conn.  213. 

40 Robinson  v.  Blon.  20  Me.  109;  Pendleton  v.  Kniekcrhocker  Life-  Ins. 
Co.,  7  Fed.  170. 

41  Oridge  v.  Sherl)oine,  11  M.  &  W.  374. 

42  1  Parsons  on  Notes  and  Bills,  374. 

43  Collins  V.  Trotter,  SI  :\To.  27S;  Thompson  v.  Ketthum,  S  .Tohns.  189; 
Bowman  v.  McChesney.  22  Gratt.  609. 

44  Bowman  v.  MeCliesney,  22  Gratt.  609. 

45  Parker  v.  Gordon,  7  East,  385 ;  Elford  v.  Teed,  1  Maule  &  S.  2S. 

46  Reed  V.  Wilson,  41  N.  J.  L.  29;  Salt  Sprinf,^s  Nat.  Bank  v.  Burton, 
58  N.  Y.  432;  First  Nat.  Bank  v.  Owen,  23  Iowa,  185. 


g  1323.  TlMi:    Ui-     i'KESK-NTMKNT.  -'->< 

bank,"  no  particnlar  bank  being-  named,  the  hour  will  be 
determined  by  the  usual  banking  liours  at  the  several  banks 
of  the  place  where  it  is  payable.'^  It  is  for  the  jury  U>  say 
what  are  business  hours,  and  in  tixing  them  otherwise  than 
in  respect  to  the  banks,  they  are  to  have  reference  to  th(; 
general  hours  of  business  at  the  place,  rather  than  to  the 
custom  of  any  particular  trade.'**  The  courts  of  England 
take  judicial  cognizance  of  the  banking  hours  of  London, 
but  not  of  other  cities  or  towns  in  the  Empire,'''  wliile  the 
American  courts  take  judicial  notice  of  the  banking  hours  of 
any  large  city  within  the  jurisdiction  of  the  court  trying  the 
cause;  i.  c,  the  courts  of  Massachusetts  woul<l  not  take  cog- 
nizance of  the  banking  hours  of  the  city  of  Xew  York,  but 
would  of  Boston/'** 

If  the  instrument,  by  its  terms,  is  not  payal)le  at  a  bank 
or  other  named  place,  presentment  may  be  made  at  any 
reasonable  hour  of  the  day,  within  what  are  termed  '*  busi- 
ness hours,"  which  really  means  throughout  the  whole  day 
to  the  hours  of  rest  in  the  evening/^ 

§  323.  Business  hours  in  reference  to  business  places  and 
places  of  residence. —  When  ])rosciitment  is  at  the  place  of 
business  it  must  be  during  the  hours  when  such  places  are 
customarily  open,^^  or  at  least  while  some  one  is  there  com- 
petent to  give  an  answer.  It  is  only  when  presentment  is 
at  the  residence  that  the  time  is  extended  to  the  hours  of 
rest.^"'  But  presentment  at  any  hour  cannot  be  considered 
unreasonable  if  any  person  competent  to  answer  be  found 
there  who  gives  an  answer  refusing  to  pay,^'  and  an  aver- 

47  United  States  Bank  v.  Carneal,  2  Pet.  548:  {  hunh  v.  Clark,  21 
Pick.  .310. 

•is  Thompson  on  Hills,  .302. 

49  Parker  v.  Gordon,  7  East,  385;  Jameson  v.  Swinton,  2  Taunt.  22."): 
Hare  v.  Henty.  10  C.  B.  (N.  S.)  65. 

5<)  Jlorse  on  Banking,  371. 

r.l  Salt  Sprinjis  Nat.  Bank  v.  Burton,  58  N.  Y.  432;  Skelton  v.  D\in~ton, 
92  111.  49. 

r>2  Lunl  V.  Adams,  17  Me.  230. 

fi^  Banlay  v.  Bailey,  2  Campl).  427. 

r.4Garnctt   v.  Woodcock,   1   Stark.  47.">:   (  hitty  on   Bills   [•.3S7b  4r>S. 


20S  ^KESI•:^•T.ME^•T   von   i'aymk.nt.  §  324. 

1110 nt  of  lu-esentment  and  demand  at  the  maker's  office  has 
been  hekl  to  import  that  it  was  during  the  usual  hours  of 
business.^^ 

§324.  When  instmment  payable  on  demand. —  All  l)Ills  of 
exchange  payable  on  demand  are  closely  assimilated  to 
checks,  and  contemplate  the  immediate  payment  of  the 
amount  called  for.  They  are  payable  immediately  on  pre- 
sentment, without  grace,  and  if  the  drawee  and  the  payee 
or  indorsee  reside  in  the  same  place,  it  is  laid  down  by  a 
number  of  the  authorities  that  they  must  be  presented 
within  business  hours  of  the  day  on  which  they  are  drawn 
in  order  to  hold  the  drawer  in  the  event  of  the  failure  of 
the  drawee  to  honor  them.^'^  And  that  if  the  drawee  re- 
sides in  a  different  place  they  must  be  forwarded  by  the 
regular  post  of  the  day  after  they  are  received.'^'  But  these 
rules  are  not  inflexible.  AVhat  is  reasonable  time  must  de- 
pend upon  circumstances  and  in  many  cases  upon  the  time, 
the  mode,  and  the  place  of  receiving  the  bills,  and  upon  the 
relations  of  the  parties  between  whom  the  question  arises.^* 
Where  the  draft  required  indorsement  by  a  school  board, 
which  had  to  be  convened,  delay  of  a  week  to  forward  it 
was  held  justifiable.^^ 

Promissory  notes  payable  on  demand  would  seem  to  stand 
on  a  somewhat  different  footing.  In  England  a  note  on  de- 
mand is  regarded  as  a  continuing  security  which  it  is  not 
necessary  to  present  for  payment  on  the  next  day  when  the 
parties  reside  in  the  same  place;  or  to  send  by  the  post  of 
the  next  day  when  they  reside  in  different  places;®"  but  in 
the  United  States,   as  a   general  rule,   a  different   view  is 

S.'i  Wallace  v.  Crilloo,  46  Wis.  .577;  Daniel  on  Negotiable  Instruments, 
§  603. 

SOKampmann  v.  Williams.  70  Tex.  .571  ;  McMonigal  v.  Brown,  45  Ohio 
St.  .504. 

57Chi'tty  on  Hills  (l.Stli  Am.  ed.),  4:32;  Parker  v.  Reddiek,  65  Miss.  246. 

•W  Morgan  v.  United  States,  113  U.  S.  .501;  Marbourg  v.  Brinknian. 
23  Mo.  App.  .513. 

59  Muncy  Borough  School  Dist.  v.  Commonwealth,  84  Pa.  St.  464. 

00  Morgan  v.  United  States,  113  U.  S.  501;  Brooks  v.  Mitchell,  9 
M.  &  W.  15. 


325.  TIME    OF    I'UE.SKNTMENT. 


200 


taken,  and  payment  must  be  speedily  demanded,  in  order 
to  preserve  recourse  against  the  indorser,  and  to  preserve 
the  note  from  defenses  which  may  be  made  against  overdue 
paper.®^  It  is  bettor  in  all  cases  where  the  question  is  not 
settled,  to  decline  taking  a  note  on  demand  by  indorsement; 
or  if  taken,  to  present  it  with  tlic  utmost  dispatch.  But 
if  the  note  is  payable  on  dcnumd  iriUi  interest,  it  is  regarded, 
both  in  England  and  the  United.  States,  as  a  continuing  in- 
terest-bearing security.  In  such  case  "  it  would  be  contrary 
to  the  general  course  of  business  to  demand  payment  short 
of  some  proper  point  for  computing  interest,  such  as  a 
quarter,  a  half  year,  or  a  year;"  but  the  authorities  are  in 
painful  contrariety.*^ 

§  325.  True  principle  involved;  summary. —  Where  a  prom- 
issory note  payable  on  demand  was  indorsed  at  the  time  of 
making,  and  whether  it  bore  interest  or  not,  it  would  be- 
come, by  the  very  act  of  indorsement,  a  draft  by  the  indorser 
upon  the  maker;  and  the  indorsee  holding  it  should  regard 
it,  as  it  is  in  fact,  a  demand  through  him  for  the  amount 
due  the  indorser.  And  it  should,  therefore,  be  presented 
immediately,  subject  only  to  such  qualifications  as  apply  to 
a  bill  payable  at  sight.^^ 

Byles,  in  his  work  on  bills,  gives  the  following  sound  and 
correct  summary  on  the  subject  of  demand  paper:  "A 
common  promissory  note  payable  on  demand  differs  from 
a  bill  payable  on  demand,  or  a  check,  in  this  respect:  the 
bill  and  check  are  evidently  intended  to  be  presented  and 
paid  immediately,  and  the  drawer  may  have  good  reasons 
for  desiring  to  withdraw  his  funds  from  the  control  of  the 
draw'ee  without  delay;  but  a  common  promissory''  note  pay- 
able on  demand  is  very  often  originally  intended  as  a  con- 
tinuing security,  and  afterward  inrlorsed  as  such.  Indeed, 
it  is  not  uncommon  for  the  payee,  and  afterward  the  in- 

61  1  Parsons  on  Notes  and  Bills,  .376,  377;  Keyes  v.  Fenstermaker,  24 
Cal.  331. 

62  Daniel  on  Negotiable  Instruments,  §§  608-610,  and  cases  cited. 

63  Daniel  on  Negotiable  Instruments,  §  610;  Bassenhorst  v.  Wilby,  45 
Ohio  St.  339. 

14 


210  PKESEXTMEXT    FOR    TAYMENT.  §  320. 

dorsee,  to  receive  from  the  maker  interest  periodically  for 
mauy  years  on  such  a  note.  And  sometimes  the  note  is  ex- 
pressly made  payable  with  interest,  which  clearly  indicates 
the  intention  of  the  parties  to  be,  that  though  the  holder 
may  demand  payment  immediately,  yet  he  is  not  bound  to 
do  so.  It  is,  therefore,  conceived  that  a  common  promis- 
sory note  payable  on  demand,  especially  if  made  payable 
w-itli  interest,  is  not  necessarily  to  be  presented  the  next 
day  after  it  has  been  received  in  order  to  charge  the  in- 
dorser;  and  when  the  indorser  defends  himself  on  the  ground 
of  delay  in  presenting  the  note,  it  will  be  a  question  for 
the  jury  whether,  under  all  the  circumstances,  the  delay  of 
presentment  was  or  was  not  unreasonable."  ^*  * 

§  326.  Days  of  grace ;  origin  and  nature  of —  They  were 
originally  days  allowed  by  way  of  favor  to  the  drawee  of  a 
foreign  bill  to  enable  him  to  pro^^ide  funds  for  its  payment 
without  inconvenience;  and  were  called  ''  days  of  grace,"  or 
"  respite  days,"  because  they  were  gratuitous,  and  dependent 
on  the  holder's  pleasure,  and  not  to  be  claimed  as  a  right 
by  the  person  on  wdiom  it  was  incumbent  to  pay  the  bill.*'^ 
By  custom,  however,  they  became  universally  recognized; 
and  although  still  termed  "  days  of  grace,"  they  are  now 
considered  wherever  the  law  merchant  prevails  as  entering 
into  the  constitution  of  every  bill  of  exchange  and  nego- 
tiable note,  both  in  England  and  the  United  States,  and 
fonn  so  completely  a  part  of  it  that  the  instrument  is  not 
due  in  fact  or  in  law  until  the  last  day  of  grace.®®  There- 
fore a  demand  of  payment  on  the  day  before  or  after  the 
third  day  of  grace  would  not  authorize  a  protest,  or  charge 
drawer  or  indorser.®^  And  interest  is  chargeable  on  the 
period  of  grace  allow^ed  without  impeachment  as  usurious.*'^ 

fi^Eyles  on  Bills  (Sharswood's  ed.),  338. 
GSChitty  on  Bills  [•374],  422. 

6«Bank  of  Washington  v.  Triplett,  1  Pet.  25;   Ogden  v.  Saunders,   12 
Wheat.  213;  Bell  v.  First  Nat.  Bank,  115  U.  S.  373. 

67  Bank  of  Washington  v.  Triplett,  1  Pet.  25;  Donegan  v.  Wood,  49 
Ala.  242. 

68  Bank  of  Utica  v.  Wager,  2  Cow.  712;  Ogden  v.  Saunders,  12  Wheat. 
213. 


§327.  TIMK    OF    I'UKSKNTMKXT.  IJ  i  1 

Tliis  indulgence  was  often  important  to  the  drawee,  wlio 
might  not  be  instantly  in  funds,  nor  advised  that  the  bill 
■would  at  that  time  be  presented  for  payment;  and  also 
even  when  it  was  accepted,  because  of  the  scarcity  of  the 
precious  metals  in  which  payment  was  to  be  made.  And 
they  fixed  a  limit  to  the  time  wliich  the  holder  might  in- 
dulge the  payor  A^ithout  being  guilty  of  laches  in  not  pro- 
testing it.^'* 

§  327.  What  bills  and  notes  entitled  to  grace ;  whether  sight 
bills  entitled  to. —  Ail  bills  of  exchange  and  negotiable  notes 
are  entitled  to  grace,'"  except  those  payable  on  demand'^ 
or  without  specilication  of  time,  in  which  case  on  demand 
without  grace  is  understood,""  or  those  expressly  payable 
without  grace.*^^  The  authorities  are  uniform  in  support 
of  this  statement  of  the  law,  except  in  respect  to  its  inclusion 
of  sight  bills  and  notes,  which  by  some  is  denied  and  by 
others  doubted.  In  England  there  has  not  been,  that  we 
are  aware  of,  a  direct  decision  of  the  question;  but  it  has 
been  taken  for  granted  in  some  cases,  and  distinctly  inti- 
mated in  others,  that  a  sight  bill  or  note  is  entitled  to  three 
days'  grace;"'*  and  the  weight  of  authority  in  the  United 
States  is  to  the  same  effect. '^^  The  expression  "  after  sight  " 
in  a  bill  of  exchange  has  a  different  signification  from  the 
like  expression  in  a  promissory  note.  In  a  bill  of  exchange 
it  means  after  acceptance,  or  protest  for  nonacceptance,  and 
not  after  a  mere  private  exhibition  to  the  drawee,  for  the 
sight  must  appear  in  a  legal  way.'^®  But  a  note  is  incapable 
of  acceptance,  and  the  words  "  at  or  after  sight  "  used  in  it 

69  story  on  Bills,  §  333. 

70  Brown  v.  Chancellor,  61  Tex.  440;  1  Parsons  on  Notes  and  Bills,  404. 

71  Edwards  on  Bills,  523;  Oridge  v.  Sherborne,  11  M.  &  W.  374;  Wood- 
ruff V.  INIerchants'  Bank,  25  Wend.  673. 

72  Story  on  Bills,  §  343;  First  Nat.  Bank  v.  Price,  52  Iowa,  570;  1 
Parsons  on  Notes  and  Bills,  381. 

7.'5  Daniel  on  Negotiable  Instruments,  §  633. 

74  Webb  V.  Fairmauer,  3  M.  &  W.  473;  Coleman  v.  Sayer.  1  Barn.  303; 
Dehers  v.  Harriot,  1  Show.  163;  Jansen  v.  Thomas,  3  Doug.  421. 

75  Daniel  on  Negotiable  Instruments.  §  617. 

76  Campbell  v.  French,  6  T.  R.  212;  Mitchell  v.  De  Grand,  1  Mason,  176. 


212  PRESENTMENT  FOR  PAYMENT.  §  328. 

would  merely  import  that  payment  was  not  to  be  demanded 
until  it  bad  been  again  exhibited  to  the  maker.' '  If  the  bill 
or  note  be  payable  in  instalments, .  it  is  entitled  to  grace  on 
each  instahnent,  for  it  is  really  so  many  instruments  in  one 
form."^**  If  it  is  payable  "  on  demand  at  sight,"  it  is  the 
same  as  if  payable  ''  at  sight."  '^ 

§  328.  Number  of  days  allowed  by  law  merchant  and  by 
custom. —  The  law  merchant,  as  it  prevails  in  England  and 
the  United  States,  limits  the  allowance  of  grace  to  three 
days,^  and  although  it  is  settled  that  by  special  established 
usage  in  a  particular  locality  it  may  be  denied  altogether, 
or  a  different  nmnber  of  days  may  be  granted,^^  the  courts 
take  judicial  notice  of  the  period  fixed  by  the  law  merchant, 
and  vnll  recognize  that  only  unless  the  usage  varying  it  is 
alleged  and  proved.^^  In  the  District  of  Columbia  the  usage 
at  one  time  prevailed  to  allow  four  days,  and  it  was  sus- 
tained as  binding  upon  parties  to  negotiable  instruments 
there  payable,  by  the  United  States  Supreme  Court.^  It 
extended,  however,  only  to  notes  discounted  in  bank.^'*  In 
Louisiana,  at  one  time,  ten  days  were  allowed;  but  this  was 
changed  by  statute  to  conform  to  the  law  merchant  in  the 
United  States,^^  and,  of  course,  no  custom  can  affect  a  posi- 
tive enactment.^"  In  the  absence  of  any  statute,  the  usage 
of  banks  in  particular  localities  in  allowing  grace,  and  the 
number  of  days,  may  alter  the  law  merchant  in  that  particu- 
lar.®^    The  following  principles  on  this  subject  may  be  re- 

77  Holmes  v.  Kerrison,  2  Taunt.  323 ;  Sutton  v.  Toomer,  7  B.  &  C.  416. 

78  0ridge  v.  Sherborne,  11  M.  &  W.  374. 

79  Dixon  V.  NuttaU,  1  Cromp.,  M.  &  R.  307. 

80  Hill  V.  Lewis,  Skin.  410;  Wood  v.  Corl,  4  Mete.   (Mass.)   203. 

81  Renner  v.  Bank  of  Columbia,  9  Wheat.  581 ;  Mills  v.  Bank  of  United 
States,  11  Wheat.  431. 

82  Renner  v.  Bank  of  Columbia,  9  Wheat.   581;   Reed  v.  Wilson,  41 
N.  J.  L.  29. 

83  Mills  V.  Bank  of  United  States,  11  WTieat.  431. 

84  Cookendorf er  v.  Preoton,  4  How.  317. 
sSDubreys  v.  Farmer,  22  La.  Ann.  478. 

86  Perkins  v.  Franklin  Bank,  21  Pick.  483. 

rf7Penn('r  v.  Bank  of  Columbia,  9  Wheat.  581;    Adams  v.  Otterback, 
15  How.  539. 


g  329.  Ti-Mi:    OF    rUK.SKNTMENT.  213 

garded  as  established:  Fiml.  That  the  usage  must  bo 
notorious,  in  order  that  an  inference  may  be  drawn  that  it 
is  known  to  the  public,  and  especially  to  those  dealing  with 
the  bank,  and  therefore  create  the  further  inference  of 
expressed  or  implied  assent.  Second.  That  when  a  usage 
has  been  sanctioned  by  judicial  decision  it  becomes  settled 
law.  No  further  proof  is  necessary  to  establish  it,  and  no 
evidence  is  admissible  to  controvert  the  law  laid  down  by 
the  court.  Third.  That  it  should  apply  to  a  place  rather 
than  to  a  particular  bank.  Fourth.  That  it  need  not  be 
knowTi  to  the  party  dealing  with  the  bank  at  a  particular 
place.*^ 

§  329.  The  term  ''  month  "  and  computation  of  months. — 
By  the  conmion  law  of  England  a  month  is  deemed  a  lunar 
month,  and  is  computed  accordingly  in  construing  common 
law  contracts  and  statutes  ;^^  but  by  the  law  merchant,  both 
in  England  and  the  United  States,  a  month  is  construed  to 
mean  a  calendar  month  in  all  cases  of  negotiable  instru- 
ments, and  of  mercantile  contracts.^    Therefore  a  bill  dated 
the  first  day  of  January,  and  payable  one  month  after  date, 
would  be  payable   (grace  included)   on  the  fourth  day  of 
February;  and  one  dated  February  first,  payable  one  month 
after  date,  would  likewise  be  payable  (grace  included)  on  the 
fourth  day  of  ^March,  although  February  is  two,  or  three 
days  (in  leap-year),  shorter  than  Januars-.    AMien  one  month 
is  longer  than  the  next  succeeding  month,  the  computation 
of  a  month  does  not  cany  it  into  a  third  month.     Thus  a 
month  dating  from  the  thirty-first  of  January  would  expire 
on  the  twenty-eighth  or  twenty-ninth  of  Febnuiry,  as  the 
case  might  be;  and  in  leap-year,  a  month  counting  from 
the  thirty-first,  thirtieth,  or  twenty-ninth  of  January,  would 
end  on  the  twenty-ninth  of  Februaiw,  and  the  last  day  of 
grace  would  be  March  the  third.     But  if  a  bill  or  note  were 
dated  January  twenty-eighth,  a  month  therefrom  would  ter- 
es Daniel  on  Negotiable  Instruments,  §  G23,  and  cases  cit^d. 
SDChitty  on  Bills  ['373],  420. 

»o  Thomas  v.  t^hoemaker,  6  Watts  &  S.  179;  McMurchey  v.  Robinson, 
10  Ohio.  496. 


214  I'KESKMWiENT    1-OK    rAYMEA'T.         §§  330,  331. 

minate  on  Febriiarv  twenty-eighth,  and  presentment  shouia 
be  on  March  the  second.''^^ 

§  330.  As  to  the  computation  of  days. —  In  computing  the 
number  of  days  which  a  bill  or  note,  payable  at  or  in  so 
many  days  from  date,  has  to  inin,  the  day  of  date  is  always 
excluded;  and  if  payable  at  so  many  days  after  sight,  after 
demand,  or  after  a  particular  event,  the  day  of  sight,  de- 
mand, or  of  the  happening  of  the  event  is  likewise  excluded.'-^-^ 
So,  if  it  be  presented  on  one  day,  and  accepted  on  another, 
the  day  of  acceptance  is  excluded.'''^  The  expressions,  "  in 
thirty  days,"  —  "  in  thirty  days  from  date,"  —  "  at  thirty 
days,"  —  and  ''  thirty  days  after  date,"  are  synonymous.''^ 
As  said  in  Maine,  by  Howard,  J.:  "If  there  be  several 
notes  of  the  same  date,  some  payable  in  six  months,  some 
in  six  months  from  date,  and  some  in  six  months  after  date, 
they  a-U  have  the  same  pay  day.  In  all  of  them  the  day  of 
the  date  is  exehided."  ^^.  But  if  a  bill  or  note  without  grace, 
or  any  noncommercial  instrument  for  payment  of  money, 
falls  due  on  a  Sunday  or  a  legal  holiday,  it  is  not  payable 
until  the  next  regular  business  day,  for  the  payor  is  not  com- 
pellable by  law  to  pay  on  the  exact  day  named,  and  the 
next  day  is  the  first  day  that  the  creditor  can  demand  pay- 
ment.'^" But  the  debtor  cannot  require  the  creditor  to  ex- 
tend his  indulgence  beyond  three  calendar  days;  and  there- 
fore when  grace  on  a  bill  or  note  entitled  to  it  expires  on  a 
Sunday  or  other  nonbusiness  day,  the  bill  or  note  would  fall 
due  on  the  day  preceding.^^ 

§  331.  Calendar  by  which  computed. —  The  Gregorian  cal- 
endar, or  new  style  of  conii)uting  time,  is  adopted  in  the 

91  Wagner  v.  Kenner,  2  Rob.  (La.)  120;  Chitty  on  Bills  [*373],  421; 
1  Parsons  on  Notes  and  Bills,  409. 

fi2  Coleman  v.  «ayer,  1  Barn.  'MKi ;  Hill  v.  Norvell,  3  McLean,  583 ;  Lor- 
ing  V.  Hailing,  15  Johns.  120;  Mitchell  v.  De  Grand,  1  Mason,  170; 
Barlow  v.  Planters'  Bank,  9  How.   (Miss.)   129. 

93  Mitchell  V.  De  Grand,  1  Mason,  176. 

94Ammidown  v.  Woodman,  31  Me.  580;  Henry  v.  Jones,  8  Mass.  453. 

55  Ammidown  v.  Woodman,  31  Me.  580. 

96  Salter  v.  Burt,  20  Wend.  20.");  Kuntz  v.  Tempel,  48  Mo.  75. 

97Bussard  v.  Levering,  6  Wheat.  192;  Reed  v.  Wilson,  41  N.  J.  L.  29; 
Ston-  on  Bills.  §  388. 


§  0'j2.  Tl.UK    OF    i'lJK.SKMME.NT.  215 

United  States,  and  everywhere  else,  except  in  Russia,  and 
those  countries  where  the  Greek  Church  is  the  estubhshed 
religion.  They  use  the  Julian  calendar,  or  old  style,  as  it 
is  called.  There  is  the  difference  of  twelve  days  between 
the  two  styles;  and  the  addition  of  that  number  to  the  old 
makes  the  new  style.  The  1st  of  January  in  St.  Petersburg, 
Russia,  is,  therefore,  the  13th  of  January  in  England  and 
the  United  States.  The  style  of  the  place  of  payment,  how- 
over,  always  prevails;  and  if  a  bill  were  drawn  in  London 
on  the  1st  of  September,  payable  in  St.  Petersburg  on  the 
1st  of  January,  it  would  fall  due  on  the  day  corresi)onding 
to  the  13tli  of  January  in  England;  and  vice  versa.  This  is 
because  the  parties  are  to  be  regarded  as  contracting  in 
reference  to  the  meaning  of  terms  at  the  place  of  their  ful- 
fillment.^8 

§  332.  How  grace  dispensed  with. —  By  any  language  in 
the  bill  or  note  of  that  import,  grace  may  be  disallowed. 
And  such  words  as  "  ^nthout  grace,"  or  "'  no  grace,"  obvi- 
ously disallow  it;  and  the  word  "fixed"  has  been  held  to 
have  the  same  import.^®  But  the  expression  "  ^vithout  de- 
falcation "  does  not  ;^  nor  would  a  mere  marginal  memoran- 
dum of  the  day  of  the  month  and  year  on  which  the  time 
after  date  at  which  the  instiiiment  was  expressed  to  be  pay- 
able fell  due.^  But  where  a  bill  at  sixty  days'  sight  was 
accepted  on  September  14th,  payable  November  16th,  it  was 
held  that  jSTovember  16th  was  indicated  by  the  acceptor  to 
be  the  absolute  day  of  payment,  he  having  intended  to  allow 
for  grace  in  his  calculation,  and  that  presentment  on  that 
day  was  necessary.* 

98  story  on  Bills,  §  331;  1  Parsons  on  Notes  and  Bills,  388;  Chitty 
on  Bills  [*369],  417:  Daniel  on  Nejrotiable  Instruments.  §  632. 

»o  Perkins  v.  Franklin  Bank.  21  Pick.  483;  Durnford  v.  Patterson,  7 
Mart.  460. 

1  Bell  V.  First  Nat.  Bank,  11.5  U.  S.  382;  McDonald  v.  Lee,  12  La.  435. 
.    2  Perkins  v.  Franklin  Bank,  21  Pick.  483. 

3  Bell  V.  First  Nat.  Bank,  115  U.  S.  382;  Kenner  v.  Creditors,  19  Mart, 
540. 


216  PRESENTMENT  FOR  PAYMENT.    §§  333,  334. 

SECTION  III. 

PLACE  OK   PRESENTMENT. 

§  333.  When  the  instrument  is  payable  generally. —  The 
presentment  of  the  bill  or  note  for  payment  should  be  made 
at  the  city,  town,  or  other  ^^l^ce  in  which  the  acceptor  or 
maker  has  his  home  or  domicile,  or  his  place  of  business, 
provided  there  be  no  place  designated  in  the  instrument  or 
agreed  upon  by  the  parties  as  the  place  where  it  shall  be 
paid  at  maturity.*  If  such  place  is  designated  or  agreed 
upon,  it  will  be  sufficient  to  make  presentment  there. ^  And 
aveiTnent  of  presentment  there  is  always  sufficient,  without 
any  addition."  If  the  bill  be  addressed  to  the  drawee  in  a 
particular  city,  as,  for  instance,  to  "A.  B.,  New  York,"  the 
city  named  would  be  regarded  as  the  place  of  presentment 
for  payment,  if  the  acceptance  be  without  explanation  or 
condition.^  If  the  maker  or  acceptor  has  both  a  dwelling- 
house  and  a  business  house  in  the  same  city,  town,  or  other 
place,  the  presentment  may  be  made  at  either.®  And  if  the 
maker  or  acceptor  have  a  dwelling-house  or  domicile  in  one 
city,  and  a  place  of  business  in  another,  it  will,  as  it  seems, 
be  sufficient  to  present  the  instrument  at  either.^  If  a  bill 
be  payable  in  a  particular  to\vn,  a  presentment  at  all  of  the 
banker's  houses  there  will  suffice.^*'  In  such  case,  where  the 
maker  used  due  diligence  to  find  at  what  bank  the  note  was 
left  for  presentment  without  success,  he  was  relieved  from  a 
penalty  for  failure  to  pay  it  the  instant  of  maturity. ■^^ 

§  334.  When  payor  has  well-known  place  of  business. — 
When,  however,  the  maker  or  accej)tor  has  a  well-known 

4  Cox  V.  National  Bank,  100  U.  S.  713;  Mitchell  v.  Baring,  10  B.  &  C.  IL 

5  Brent's  Exr.  v.  Bank  of  Metropolis,  1  Pet.  92 ;    Eason  v.  Isbell,  47 
Ala.  456. 

«  Cox  V.  National  Bank,  100  U.  S.  716;  Hawkey  v.  Borwick,  4  Bing.  136. 

7  Cox  V.  National  Bank,  100  U.  S.  716. 

8  8tory  on  Bills,  §  2.36.  ! 

9  Story  on  Bills.  §§  2.36,  .3.")1 ;  1  Parsons  on  Notes  and  Bills,  422.  note. 

10  Hardy  v.  Woodroofe,  2  Stark.  319;   Byles  on  Bills  [*207],  323. 

11  Ansel  V.  Olson,  39  Kan.  767. 


§  335.  PLACE    OF    I'KESENTMENT.  217 

house  or  place  of  business  where  he  is  accustomed  to  trans- 
act his  financial  affairs,  and  where  demand  may  be  made,  it 
would  be  safer  and  more  appropriate  to  present  it  there. 
Certainly  it  would  seem  unreasonable  to  expect,  during  the 
business  hours  of  the  day,  to  find  any  one  at  a  private  resi- 
dence to  answer  respecting  the  payment  of  a  ncgotialjle  in 
strument,  when  the  maker  or  acceptor,  if  he  have  any  place 
of  business,  would  be  jiresumably  there;  and  during  such 
business  hours  due  diligence  would  not  appear  to  have  been 
exerted  in  demanding  payment  at  his  house.^"  If,  however, 
business  hours  had  closed,  a  presentment  at  the  dwelling 
would  seem  sufficient.  It  is  undoubted  that  a  presentment 
and  demand  of  payment  at  the  place  of  business  of  the 
maker  or  acceptor  is  sufficient.^^  Where  it  was  contended 
that  the  demand  should  have  been  made  at  the  maker's 
house,  it  was  held  otherwise.^^  But  if  the  place  of  business 
cannot  be  found,  then  demand  should  be  made  at  the  maker's 
house. ^^ 

§335.  Usual  place  of  business;  rule  when  it  is  closed  and 
abandoned. —  The  place  of  business  must  be  the  "  usual  place 
of  business  "  of  the  party,  and  not  that  used  for  a  mere 
temporary  occupation ;^°  though  if  it  be  really  the  place 
where  he  transacts  his  financial  concerns,  it  matters  not 
that  it  is  a  mere  office,  or  desk  room  in  an  office  with  others, 
and  a  demand  there  in  his  absence  made  during  business 
hours  will  be  sufficient. ^^  If  the  party  has  closed  and  aban- 
doned his  place  of  business  at  the  time  the  bill  or  note 
matures,  but  has  a  place  of  residence  in  the  city  or  other 
place  where  his  business  was  conducted,  which  could  be 
ascertained  by  reasonable  inquiry,  the  presentment  for  pay- 

12  1  Parsons  on  Notes  and  Bills,  423. 

13  Lanussa  v.  Massicot,  3  Mart.  3GI. 

14  Sussex  Bank  v.  Baldwin.  2  Harrison,  487. 
isjarvis  v.  Garnett,  39  Mo.  271. 

16  Sussex  Bank  v.  Baldwin.  2  Harrison,  487. 

1"  Williams  v.  Hoogewerff,  25  :Md.  128;  Bank  of  Commonwealth  v. 
Mudgett,  44  N.  Y.  514. 


218  PRESEXTMEXT    FOU     PAYMEXT.         §§  336,  337. 

ment  should  L^  made  at  his  residence,  and  a  presentment  at 
the  former  ])hiee  of  business  will  not  suffice.^** 

^  336.  When  presentment  is  to  party  in  person,  place  gen- 
erally unimportant. —  When  the  presentment  is  made  to  the 
maker  or  acceptor  personally,  the  place  is  not  important, 
provided  there  is  an  express  or  implied  refusal  to  pay.  Pre- 
sentment at  the  barn-yard  has  been  held  sufficient,  the  party 
'^  making  no  objection,  and  intimating  no  readiness  to 
pay;"  ^'''  and  even  in  the  street  presentment  would  seem  to 
be  usually  good,  unless  objected  to  as  improper,  or  some 
reason  were  given  for  the  refusal. ^^  This  view  seems  to  us 
correct.  But  it  would  be  more  business-like  not  to  make 
demand  at  such  a  place,  and  there  are  authorities  which  hold 
that  the  party  is  not  bound  to  pay  any  attention  to  a  demand 
so  entirely  outside  of  the  custom  of  merchants.^^  In  a  case 
in  Maine  demand  on  the  street  of  the  maker,  he  having  no 
place  of  business,  and  raising  no  objection,  was  held  suffi- 
cient to  charge  the  indorser." 

§  337.  Due  diligence  in  seeking  maker  to  make  presentment. 
—  Whether  or  not  due  diligence  to  find  the  maker  of  a  note 
at  the  place  where  it  is  dated,  will  be  sufficient,  has  been 
debated.  The  place  of  date  is  prima  facie  evidence  that  it 
is  the  place  of  the  maker's  residence  and  place  of  business; 
and  it  is  sufficient,  we  should  say,  to  charge  an  indorser  to 
have  the  note  in  that  place  at  the  time  of  maturity,  and  to 
make  proper  inquiry  after  the  place  of  the  maker's  residence 
or  place  of  business,  provided  that  the  holder  does  not  know 
that  his  residence  is  elsewhere.^^  And  if  it  were  proved  that 
the  maker  resided  elsewhere,  it  would  not  devolve  upon  the 
holder  the  burden  of  showing  that  he  had  made  inquiries  as 

18  Granite  Bank  v.  Ayres,  16  Pick.  392. 

19  Baldwin  v.  Farnsworth,  1  Fairfax,  414. 

2f)  1  Parsons  on  Notes  and  Bills,  421;  King  v.  Crowell,  61  Me.  244; 
Townsend  v.  Dry  Goods  Co.,  85  Mo.  508. 

21  King  V.  Holmes,  1 1  Pa.  St.  456. 

22  King  V.  Crowell,  61  Me.  244. 

23  Britton  v.  Nichols,  104  U.  S.  757;  Bank  of  Fayetteville  v.  Lutter- 
loh,  95  N.  C.  499;  Salisbury  v.  Bartleson,  39  Minn.  366. 


§§338,339.  M(>l>i:    OF    I'KESK.NTMK.NT.  219 

to  his  resklcnco."^  While  this  doctrine  is  sustained  by  high 
authority  both  in  England  and  the  United  States,  and  is 
doubtless  correct,  there  are  decisions  conlra.^^ 

§  338.  When  payable  at  either  of  several  places  or  banks. — 
If  a  bill  of  exchange  be  drawn  payable  at  either  of  two 
places,  and  is  accepted  accordingly,  as,  for  example,  if  drawn 
payable  at  Maidstone  or  London,  the  holder  has  his  choice 
to  present  it  at  either  place  for  payment;  and  the  like  rule 
applies  to  a  note  made  payable  at  either  of  two  places.  If 
the  bill  or  note  be  not  duly  paid  at  the  place  where  it  is 
presented,  the  holder  may  protest  it  and  give  notice  to  the 
drawer  and  indorsers,  who  will  be  bound  by  its  presentment 
and  dishonor  at  the  place  of  his  election;  although  if  pre- 
sented at  the  other  place  it  would  have  been  duly  paid;  for 
in  such  cases  all  the  parties  agree  to  pay  the  bill  or  note  upon 
due  presentment  at  either  place.^®  And  sometimes  the  in- 
strument is  made  payable  at  any  or  either  of  the  banks  of  a 
particular  place.  In  all  such  places  the  stipulation  as  to  the 
place  of  payment  is  understood  to  be  for  the  accommodation 
of  the  payee  or  holder,  who  is  given  the  right  to  elect  the 
bank  at  which  the  note  should  be  presented  in  order  to 
charge  the  indorsers;  and  if,  upon  presentment  at  any  or 
either  bank  in  the  place  named,  payment  is  refused,  the  in- 
dorsers, as  well  as  the  maker,  arc  bound.  The  maker's 
promise  is  to  pay  the  note  at  any  of  the  banks  in  the  place, 
and  the  duty  is  im]iosed  upon  him  to  look  at  all  the  banks 
for  it,  or  provide  funds  to  pay  it  at  all  of  them  w^hen  it  is 
due.'^ 

SECTION  IV. 

IMODE   OF    PRESENTMEXT. 

§  339.  Must  be  actually  exhibited —  Presentment  of  the 
bill  or  note,  and  demand  of  payment,  should  be  made  by  an 
actual  exhibition  of  the  instrument  itself;  or  at  least  the  de- 

24  Smith  V.  Philbric-k,  10  Gray.  252. 

25  Daniel  on  Negotiable  Instruments,   §  640,   and  cases  cited. 

26  Daniel  on  Negotiable  Instruments,  §  648 ;  Beeching  v.  Gower,  I 
Holt.  .313;  Story  on  Bills,  §  354. 

27  Maiden  Bank  v.  Baldwin,  13  Gray,  ir)4. 


220  PKESEXTMEXT    FOK    PAYZ^IENT.  §  340. 

mand  of  payment  should  be  accompanied  by  some  clear  indi- 
cation that  the  instrument  is  at  hand,  ready  to  be  delivered, 
and  such  must  really  be  the  case.'*  This  is  requisite  in  order 
that  the  drawee  or  acceptor  may  be  able  to  judge  (Ij  of  the 
genuineness  of  the  instrument;  (2)  of  the  right  of  the  holder 
to  receive  payment;  and  (3)  that  he  may  immediately  re- 
claim possession  of  it  upon  paying  the  amount.  If,  on  de- 
mand of  payment,  the  exhibition  of  the  paper  is  not  asked 
for,  and  the  party  to  whom  demand  is  made  declines  to  pay 
on  other  grounds,  a  more  formal  presentment  by  actual 
exhibition  of  the  paper  will  be  considered  as  waived.^^ 
Where  the  note  was  in  bank,  a  few  rods  from  the  maker's 
house,  and  the  maker  was  informed  by  note  from  the  cashier 
that  it  was  there  and  requested  payment,  it  was  held  suffi- 
cient;^" and  it  was  likewise  so  held,  where  the  statement  in 
the  protest  was  that  the  notary  Avent,  with  the  draft,  to  the 
bank  and  demanded  payment.^^  So,  if  the  maker  calls  on 
the  holder  on  the  day  of  payment,  at  his  place  of  business, 
declares  his  inability  to  pay  it,  and  requests  him  to  give 
notice  to  the  indorser,  it  is  sufficient  to  charge  the  indorser, 
as  an  exhibition  of  the  paper  would  have  been  useless.^^ 
But  it  is  better  in  all  cases  to  make  an  actual  exhibition  of 
the  paper,  in  order  to  avoid  all  question.  It  seems  that  de- 
livery of  written  demand  to  a  servant  at  the  house  of  the 
promisor  is  insufficient.^^  The  demand  of  payment  should 
not  vary  from  the  tenor  of  the  paper;  and  if  it  be  payable 
simply  in  money,  without  specifying  the  kind,  a  demand  for 
gold  coin  would  be  insufficient  to  charge  an  indorser.^^ 

§  340.  Presentment  by  mail. —  Bills  of  exchange  are  most 
frequently  drawn  on  parties  at  distant  places,  and  it  is  un- 

28Musson   V.    Lake,    4    How.    262;    Nailor    v.     Bowie,    3    Md.     251; 
Crandall  v.  Schroeppel,  1  Hun,  557 ;   Etheridge   v.    Ladd,  44  Barb.  60. 
20Lockwood  V,  Crawford,  18  Conn.  361;  King  v,  Crowell,  61  Me.  244. 

30  Tredick  v.  Wendell,  1  N.  H.  80. 

31  Bank  of  Vergennes  v.  Cameron,  7  Barb.  143. 

32  Gilbert  v.  Dennis,  3  Mete.   (Mass.)  495. 

33  Duke  of  Norfolk  v.  Howard,  2  Show.  235. 

34  Langenberger  v.  Kroeger,  48  Cal.  147. 


§  341.  MODE    OF    PHESEXT.MEXT.  221 

<loiibtedly  If'gal,  customary,  and  proper  to  forward  them  by 
mail  to  correspondents  or  other  agents  at  the  place  where  the 
drawee  is  addressed,  to  be  by  them  presented,  in  due  course. 
And  in  such  cases  if  by  accident  or  default  in  the  postal 
service  they  are  not  received  in  due  time  to  be  j)resented 
at  maturity,  the  delay  occasioned  is  excused,  and  the  drawer 
and  indorsers  are  held  liable,  provided  that,  when  the  delay 
is  over,  due  diligence  is  exercised  in  making  the  present- 
ment afterward.^"'  It  has  been  said  that  presentment 
through  the  post-office  may  be  sufficient.^"  But  such  method 
of  presentment  of  bills  seems  to  be  unknown  to  the  law  mer- 
chant, and  it  might  prove  a  hazardous  and  fatal  experiment 
to  those  who  relied  upon  it.  It  has  been  lield  that  checks 
may  be  so  presented,"'''  but  the  reasons  for  the  permissibility 
of  such  mode  of  presentment  do  not  seem  to  apply  to  bills 
drawn  on  others  than  bankers,  and  Prof.  Parsons  has  well 
observed :  "  It  is  not  easy  to  see  how  a  sufficient  demand 
can  be  made  with  safety  through  the  post-office."  ^^ 

Presentment  through  the  mail  by  a  bank  acting  as  collect- 
ing agent,  has  been  held  not  sufficient  to  exonerate  it  from 
liability  in  case  of  loss  resulting  from  the  failure  of  the 
drawee,  who  had  remitted  exchange  on  IN^ew  York  in  pay- 
ment, instead  of  cash.^^ 

§341.  Leaving  instrument  in  debtor's  hands. —  A  bill  or 
note,  when  presented  for  payment,  cannot  be  left  in  the 
debtor's  hands  as  when  presented  for  acceptance;  and  if  it 
is  so  left,  presentment  cannot  be  considered  as  made  until 
payment  is  demanded.  And  if,  in  the  meantime,  the  debtor 
has  stopped  payment,  the  holder  would  suffer  to  the  extent 
of  the  difference  between  the  value  of  the  instnmient  at 

35  Daniel  on  Negotiable  Instruments,  §§  1068-1070;  Pier  v.  Heinrick- 
Shoffen,  67  Mo.  163. 

56  Benjamin's  Chalmers'  Digest,  161. 

57  Daniel  on  Negotiable  Instruments,  §  1599. 

38  1  Parsons  on  Notes  and  Bills,  371;  McGruder  v.  Bank  of  Washing- 
ton, 9  Wheat.  598;  Story  on  Bills,  §  325. 

39  Harvey  v.  Girard  Nat.  Bank,  119  Pa.  St.  212;  Drovers'  Nat.  Bank 
V.  Provision  Co.,  117  III.  108. 


222  PRESEXTMEXT    FOR    PAYM  ".XT.  §  34:2. 

the  time  it  Avas  liaiuled  the  debtor  and  the  time  payment  was 
actually  demanded. "*" 

§  342.  As  to  mode  of  presentment  of  negotiable  paper  pay- 
able at  a  bank. —  AVhen  a  bill  or  note  is  made  payable  at  a 
hank,  it  is  considered  a  sufficient  presentment  of  it  if  it  is 
actually  in  the  bank  at  maturity,  ready  to  be  delivered  up  to 
any  party  who  may  be  entitled  to  it  on  payment  of  the 
amount  due;  and  if,  at  the  close  of  business  hours,  the  bill  or 
note  remains  unpaid,  it  is  considered  as  dishonored,  and  no- 
tice should  be  inmiediately  given  to  the  proper  parties."^ 
Such  also  is  the  case  when  the  instrument  is  payable  at  a  par- 
ticular place.^-  Sometimes  a  formal  presentment  of  the 
bill  or  note,  in  such  cases,  at  the  bank,  or  upon  the  maker, 
is  made;  and  the  cases  are  uniform  in  holding  that  such  a 
presentment  at  the  bank  is  sufficient,  even  when  the  place 
is  mentioned  in  the  memorandum  ;^^  but  it  is  settled  that 
nothing  more  than  the  presence  of  the  paper  there  is  nec- 

44 

essary. 

But  it  has  been  held  by  the  United  States  Supreme  Court, 
that  though  commercial  paper  be  physically  in  the  bank  at 
which  it  is  payable,  yet  if  the  bank  is  ignorant  of  this  by 
reason  of  the  fact  that  the  letter  in  which  it  was  sent  slipped 
through  a  crack  in  the  cashier's  desk  and  disappeared  before 
it  had  been  seen  by  liim,  then  there  would  be  no  present- 
ment, though  the  acceptor  had  no  funds  there,  and  did  not 
mean  to  pay  the  bill.  And  such  a  disappearance  carried 
with  it  a  presumption  of  negligence  in  the  collecting  bank, 
and  threw  upon  it  the  burden  of  proof  to  rebut  it;  and  that 
>     -^ " ' 

40Hayward  v.  ]iank  of  England,  1  8tra.  5.10;  Tliompson  on  Bills 
(Wilson's  ed.),  304. 

4lChicopee  Bank  v.  Bhiladelphia  Bank,  8  Wall.  G41;  People's  Bank 
V.  Brooks,  31  Md.  7;  Folger  v.  Chase,  18  Pick.  G3. 

42  Hunt  V.  Maybee,  7  N.  V.  200. 

43  Bank  of  Utica  v.  Smith,  18  Johns.  230;  Woodbridge  v.  Brigham, 
13  Mass.  .5.50;  Saunderson  v.  Judge,  2  H.  Bl.  509. 

44Fullerton  v.  P>ank  of  United  States,  1  Pet,  G04;  Merchants'  Bank 
V.  Elderkin,  25  N.  Y.  178. 


§§  343,  344.  MODE  OK  i'Iikskxtment.  2l'3 

in  the  absence  of  such  proof  the  hnuk  would  he  responpihh- 
to  the  hol(]er  for  the  amount  of  ihe  hill  or  note.^'' 

§  343.  Customary  demand  by  notice  through  the  mails. —  In 
some  of  the  States  it  has  become  customary  for  banks  of  a 
particular  place,  which  are  the  holders  of  negotiable  pajier, 
to  issue  a  notice  to  the  promisor  a  few  days  before  maturity, 
informing  him  tlial  the  paper  is  in  bank,  setting  forth  th" 
date  Avhen  it  will  become  payable,  and  requesting  him  to 
come  there  and  pay  it.  Such  notice  constitutes  a  conven- 
tional demand,  and  a  neglect  to  comply  with  it  is  such  a 
refusal  as  amounts  to  dishonor  of  the  paper.  The  custom 
prevails  where  the  paper  is  payable  at  the  bank  giving  the 
notice,"*''  and  has  been  sustained  by  judicial  decision,  as  well 
where  it  is  not  made  so  payable,  but  is  placed  there  for  col- 
lection.'*^ In  Massachusetts  this  custom  has  become  so  gen- 
eral and  universal  that  every  one  who  incurs  the  lialnlity 
of  maker  and  indorser  is  presumed  to  have  contracted  in 
reference  to  it,  and  knowledge  on  his  part  may  be  pre- 
sumed.'*^ In  respect  to  the  maker  of  a  note  or  the  acceptor 
of  a  bill  in  terms  payable  at  a  particular  place,  this  custom 
to  inform  him  that  his  paper  is  there,  and  that  he  is  re- 
quested to  meet  it,  amounts  to  nothing  more  than  a  reminder 
from  creditor  to  debtor,  which  in  law  is  a  superfluous  act  so 
far  as  he  is  concerned.  But  in  respect  to  the  drawer  or 
indorser,  the  holder's  contract,  when  the  instrument  is  pay- 
able ffcnerallv  is  that  he  will  i)rosent  the  instrument  to 
the  acceptor  or  maker;  and  the  theory  upon  which  the  duty 
in  this  regard  is  considered  relaxed  by  custom  is  that  the 
party  secondarily  liable  has,  in  effect,  waived  the  formal 
presentment  otherwise  required  by  law,  and  consented  to 
the  substitution  of  notice  throiioh  the  mails. 

§  344.  Knowledge    of    conventional    method    of    demand. — 
Knowledge   by  the  drawer  or  indorser   of  the  custom  has 

45  Chicopee  Bank  v.  Philadelphia  Bank,  S  ^Yall.  641. 

46  Camden   v.   Doremus,   3  How.   ol.j;     Lincoln   &    Kennebec  Bank  v. 
Page,  9  Mass.  155. 

47  Jones  V.  Fales.  4  Ma,ss.  245;  Whitewell  v.  .Johnson,  17  !Mass.  449. 
48Crand  Bank  v.  Blanchard,  23  Pick.  505. 

48  Daniel  on  Negotiable  Instruments,  §  660. 


224  prese>:tmext  for  pawmext.  §  344. 

been  regarded  as  essential  to  its  establishment  as  against 
him  in  some  cases.^  But  the  United  States  Supreme  Court 
say  that  parties  are  bound  by  an  established  usage  of  a 
bank  at  which  the  paper  is  payable  "  whether  they  have  a 
personal  knowledge  of  it  or  not;"  ^^  and  as  the  custom  must 
be  general,  in  order  to  obtain  recognition  as  such,  we  cannot 
perceive  that  knowledge  of  it  enters  into  the  question  any 
more  than  knowledge  of  any  other  rule  of  law.  A  custom 
is  not  a  special  personal  contract,  but  a  general  and  con- 
trolling rule.  "  The  parties  are  presumed  by  implication 
to  be  governed  by  the  usage  of  the  bank  at  which  they  have 
chosen  to  make  the  security  itself  negotiable."  ^^ 

soLeavitt  v.  Simes,  .3  N.  H.  14. 

51  IMills  V.  Bank  of  United  States,  11  Wheat.  431. 

52]Mills  V.  Bank  of  United  States,  11  Wheat.  431. 


CHAPTER  XII. 

PROTEST  AND  NOTICE  OF  DISHONOR. 


SECTION  I. 

I'KOTEST. 


§  345.  Meaning  of  term —  The  term  includes,  in  a  popular 
sense,  all  tlic-  .steps  taken  to  fix  the  liability  of  a  drawer  or 
indorser,  upon  the  dishonor  of  commercial  paper  to  which 
he  is  a  party.  More  accurately  speaking,  it  is  the  solenm 
declaration  on  the  part  of  the  holder  against  any  loss  to  be 
sustained  by  him  by  reason  of  the  nonacceptance,  or  even 
nonpapnent,  as  the  case  may  be,  of  the  bill  in  (piestion; 
and  a  calling  of  the  notary  to  witness  that  due  steps  have 
been  taken  to  prevent  it.  The  word  **  protest "  signifies  to 
testify  before;  and  the  testimony  before  the  notary  that 
i:)roper  steps  were  taken  to  fix  the  drawer's  liability  is  the 
substance,  and  tlie  certificate  of  the  notary  the  formal  evi- 
dence, to  which  the  term  protest  is  legally  applicable.^ 

§  346.  Protest  for  nonacceptance. —  According  to  the  Eng- 
lish law,  the  protest  must  be  made  in  the  case  of  dishonor 
by  nonacceptance  as  well  as  dishonor  by  nonpayment.^  And 
the  same  rule  prevails  in  the  United  States,^  although  it  was 
decided  by  the  Supreme  Court  of  the  United  States,  in  an 
action  on  a  protest  for  nonpayment  of  a  foreig^l  bill,  that 
a  protest  for,  or  notice  of,  nonacceptance,  need  not  be 
sho\\ai,  inasmuch  as  they  were  not  r(»quired  by  the  custom 
of  merchants  in  this  country."*  But  the  English  rule  has 
been  deemed  the  most  consistent  \Hth  conunercial  policy  by 
the  highest  authorities,  and  Storv'  and  Kent  adopt  it  as  the 
true  one.° 


1  Daniel  on  Xoj^otiable  Instruments,  §  029. 

2  Gale  V.  Walsh,  .j  T.  R.  239;    Benjamins  Chalmers"  Digest,   17G. 

3  Mason  v.  Franklin,  3  Johns.  202;   Watson  v.  Loring,  3  Mass.  557; 
Phillips  V.  :MtCurdy,  1  Harr.  &  J.  1S7 ;  Story  on  Bills,  §  273. 

■1  Clarke  v.  Russell,  3  Dall.  295;  Brown  v.  Barry,  3  Dall.  3G5. 
•'i  Kent  Comm.  9.");  Story  on  Bills,   §  273. 

15 


22G  J'KOTEST    AND    NOTICE    OF    DISHONOR.  §  347. 

•§  347.  What  instruments  must  or  may  be  protested. —  When 
a  foreign  bill  of  exclumge  is  presented  for  acceptance  or 
payment,  and  acceptance  or  payment  is  refused,  the  holder 
mnst  take  ^vhat  is  called  a  protest,  in  order  to  charge  the 
drawer  or  any  iiulorser.  According  to  the  law  of  most 
foreig-n  nations,  a  protest  is  essential  in  the  case  of  the  dis- 
honor of  any  bill;^  but  by  the  custom  of  merchants  in  Eng- 
land,^ and  wherever  the  law  merchant  prevails  in  the  United 
States,  the  protest  is  only  necessary  in  the  case  of  foreign 
bills  ;^  though  by  statute  in  most  of  the  States  inland  bills 
and  ])romissory  notes  may  be  protested  in  like  manner.  So 
indispensable  is  the  protest  of  a  foreign  bill  in  case  of  its 
dishonor,  that  no  other  evidence  will  supply  the  place  of  it, 
and  no  part  of  the  facts  requisite  to  the  protest  can  be 
proved  by  extraneous  testimony,  and  it  has  been  said,  that 
it  is  a  part  of  the  constitutitn  of  a  foreign  bill.^  But, 
while  the  practice  is  usually  followed  to  protest  inland  lulls 
and  notes,  under  the  permissive  statutes,  it  is  not  a  practice 
which  makes  it  incumbent  to  protest  them;  and  the  holder 
may  waive  the  privilege  if  he  choose  to  do  so,  and  produce 
other  evidence  of  dishonor.^*^  Such  was  the  convenience 
of  evidence  in  this  form,  ob\aating  the  necessity  of  the  at- 
tendance of  witnesses,  and  preserving  their  testimony  where 
otherwdse  it  might  be  lost  by  death  or  removal,  that  it  be- 
came common  to  protest  inland  bills,  and  promissory  notes 
as  well;  and  the  holder  was  often  disappointed  in  finding 
that  such  protest  was  not  evidence  of  dishonor. ^^  This  led 
to  a  very  general  enactment  of  statutes  authorizing  pro- 
tests in  such  cases;  and  giving  them  the  like  eifect  as  in 
cases  of  foreign  bills. 

Follomng  the  reasons  underlying  the  necessity  and  wis- 
dom of  the   rule  requiring  protest  of  foreign   bills  of  ex- 

'■' 'J'liompson  on  P>i]ls   (Wilson's  ed.),  307. 

7  0rr  V.  ]\[aginnis.  7  East,  359;  Gale  v.  Walsh,  5  T.  R.  239. 

8  Burke  v.  McKay,  2  How.  66;  Young  v.  Bryan,  6  Wheat.  146;  Ocean 
Nat.  Bank  v.  Williams,  102  Mass.  141. 

0 Union  Bank  v.  Hydo,  6  Wheat.  572;  Borough  v.  Perkins,  1  Salk.  121. 
10  Bailey  v.  Dozier,  6  How.  23 ;  Wanger  v.  Tupper,  8  How.  234. 
112  Rob.  Pr.  121. 


§  348.  PROTEST.  -^-^l 

change,  some  authorities  say  tliat  foreign  promissory  notes, 
—  L  e.,  notes  executed  in  (uic  State  or  (•duutrv  aii<l  ])ayal»l(j 
in  anotlier  —  must  be  protested;'"  but  there  are  cases  in 
which  the  ()p])()site  view  has  been  taken.'"* 

v;  348.  By  whom  the  protest  should  be  made,  and  how  au- 
thenticated.—  As  to  the  person  by  whom  the  protest  shouhi 
be  mach',  it  is  necessary,  as  a  general  rule,  that  it  should 
bo  made  by  a  notary  public  in  person,  and  by  the  same  no- 
tary who  presented  and  noted  the  bill.'*  The  notary  is  a 
public  ofHcer,  commissioned  by  the  State,  and  possessing  an 
otHcial  seal,  and  full  faith  and  credit  are  given  to  his  official 
acts,  in  foreign  countries  as.  well  as  his  o^vn.^'*  But  when 
no  notary  can  be  conveniently  found,  the  protest  may  be 
nuule  by  any  respectable  private  individual  residing  in  the 
place  where  the  bill  is  dishonored.'"  In  England,  by  stat- 
ute,'" the  protest  of  inland  bills  by  a  private  person  must 
be  authenticated  by  the  signature  of  the  individual  making 
the  protest  in  the  presence  of  two  or  more  credible  wit- 
nesses, but  it  does  not  appear  to  be  necessary  that  there 
should  be  mtnesses  to  the  protest  of  a  foreign  bill  by  a  pri- 
vate person. ^^  If,  however,  the  ])rotest  is  made  by  a  notary, 
the  official  seal  of  the  notary  attached  to  the  certificate  of 
protest  is  everywhere  received  as  a  sufficient  prima  facie 
proof  of  its  authenticity.  The  courts  take  judicial  notice 
of  the  seal,  and  it  proves  itself  by  its  appearance  u]^on  the 
certificate.  But  it  may  be  controverted  as  false,  fictitious,  or 
improperly   annexed."*      But  if   the  protest   is  made  by  a 

12  Williams  v.  Putnam,  14  X.  H.  .">40;  Tioonic  Bank  v.  Stackpole,  41 
Me.  302;  Edwards  on  Bills.  oS4. 

13Kirtland  v.  Wiinzor.  2  niior.  278. 

1-t  Ocean  Nat.  Bank  v.  Williams.  102  ilass.  141;  Sacriber  v.  Brown, 
3  McLean,  481;  Commercial  Bank  v.  Varaum,  49  N.  Y.  269;  Commer- 
cial Bank  v.  Barksdalo.  .30  Mo.  r)03. 

15  Daniel  on  Xejiotiable  Instruments,  §§  ri79.  587. 

16  Burke  v.  McKay,  2  How.  OG;  Read  v.  Bank  of  Kentucky,  1  T.  R. 
Mon.  01. 

17  0  &    10  Will.   III.  chap.    17. 

IS  Brooks  Notary.  103:    Cliitty  on  Bills   r*-'533].  374,  note  u. 
19  Pierce  v.  Indsetli.  100  I'.  S.  r)4n ;    Nichols  v.  Webb,  8  Wheat.  320; 
Bradley  v.  Northern  Bank.  00  Ala.  258. 


228  PROTEST  AND  NOTICE  OF  Disiioxoi;.      §§  '>41>,  ;55(). 

notary,  and  the  certificate  is  not  authenticated  by  the  no- 
tary's seal,  or  if  it  is  made  by  a  private  person,  it  does  not 
prove  itself,  and  there  must  be  extraneous  evidence  to  show 
that  it  was  (hily  nuulo  by  tlic  person  officiating."'^  In  some 
cases  it  has  been  hekl  that  a  notary's  certificate  of  protest 
is  sufficient  \\'ithout  a  seal,  the  law  giving  full  effect  to  his 
protestations  and  attestations."^ 

§  349.  Place  of  protest. —  It  is  usually  made  at  the  place 
where  the  dishonor  occurs.^  If  the  protest  be  for  nonac- 
ceptance,  the  place  of  protest  should  be  the  place  where 
the  bill  is  presented  for  acceptance,  and  a  like  rule  obtains 
if  the  protest  be  for  nonpayment  ;^^  but  when  the  bill  is 
drawn  upon  the  drawee  in  one  place,  and  by  its  terms 
made  payable  in  another,  there  is  eminent  authority  for 
the  statement  that  the  protest  for  nonacceptancc  may  be 
made  at  either  place. ^'* 

§  350.  The  presentment  and  demand  of  payment ;  notary 
must  have  personal  knowledge  of. —  The  first  step  taken  is 
th(^  pror-entnicnt  of  the  instrument  to  the  drawee,  or  accep- 
tor, or  maker,  by  the  notary,  and  a  demand  of  payment. 
By  the  law  mei'chant,  it  is  absolutely  necessary  that  the  no- 
tary himself  should  make  this  formal  presentment  and 
demand.  And,  although  the  holder  may  have  already  pre- 
sented the  bill  and  demanded  acceptance  or  payment,  and 
been  refused,  it  is  still  necessary  that  the  presentment  and 
demand,  which  are  to  be  made  the  basis  of  the  notary's  cer- 
tificate, should  be  made  by  him  in  person.  For  otherwise 
his  testimony  contained  in  the  protest  would  be  hearsay  and 
secondary,  and  would  lack  the  very  element  of  certainty 
which  the  protest  is  especially  designed  to  assure.  Xot  even 
his  clerk,   nor,   unless  authorized  by   law,   his   deputy,   can 

20  Carter  v.  Burley,  9  N.  H.  5.58;  Chanoine  v.  Fowler,  .3  Wend.   173. 

21  Bank  of  Kentucky  v.  Piirsley,  3  T.  B.  Mon.  240;   Hviffaker  v.  Na- 
tional Bank,  12  Bush,  29.3. 

22  Benjamin's  Clialrners'  Digest,  175;  2  Ames  on  Bills  and  Xote*.  450; 
Edwards  on  Bills,  580. 

23  Story  on  Bills,  §  282. 
24Chitty  on   I'.UU  I*.3341.  374. 


§  351.  PKOTEST.  229 

perform  these  functions  for  the  notary,  as  it  is  to  his  official 
character  that  the  law  imputes  the  solemnity  and  sanction 
which  are  accorded  his  certificate.^ 

§  351.  Time  within  which  certificate  of  protest  must  be  pre- 
pared ;  skeleton  protest. —  As  a  general  rule,  it  may  be  stated 
that  the  certiticatc  of  protest  iiiiist  be  prepared  and  com- 
pleted on  the  day  of  the  fonnal  presentment  and  dishonor 
of  the  instrument;  but  the  necessity  for  this  may  be  obvi- 
ated by  noting-  the  dishonor  of  the  instrument  on  the  day 
of  its  maturity  and  after  formal  presentment.  By  "  noting 
the  dishonor "  is  meant  the  making  by  the  notary  of  a 
minute  on  the  bill,  on  a  ticket  attached  thereto,  or  in  his 
book  of  registiy,  of  the  initials  of  the  notary,  the 
month,  the  day,  the  year,  the  refusal  of  acceptance 
or  payment,  together  with  his  notarial  charges.  This  is 
the  preliminary  step  toward  the  protest,  which  may  be 
afterward  written  out  in  full  —  extended,  as  the  elabora- 
tion of  these  minutes  is  termed  —  at  any  time  before  it 
is  actually  needed  in  court.  "  Xoting,"  it  was  said  in  an 
early  case,  "  is  unknown  to  the  law,  as  distinguished  from 
the  protest;  it  is  merely  a  preliminary  step  to  the  protest, 
and  has  grown  into  practice  mthin  these  few  years."  ^'  But 
it  is  now  quite  well  established  in  England,  Scotland,  and 
the  United  States,  that  the  noting  is  a  kind  of  "  initial  pro- 
test," as  Thompson  aptly  terms  it,  not  self-sufficient  as  a 
protest,  but  sufficient  in  the  meantime,  if  the  certificate  of 
protest  is  regularly  extended  af  terward.^^  It  must  be  made 
on  the  very  day  of  dishonor  by  nonacceptance  or  nonpay- 
ment, otherwise  it  cannot  be  made  the  basis  of  the  extended 
protest.  For  the  notary  will  not  be  permitted  to  trust  to  his 
memorv  for  the  requisite  particulars.  It  is  to  his  contem- 
poraneous written  statement  that  the  law  gives  credit.^^ 

25  Daniel  on  Ne<;otiable  Instruments,  §§  579,  587,  938. 

26  Leftly  V.  Mills.  4  T.  R.  170. 

27Chaters  v.  Bell,  4  Esp.  48;  Edwards  on  Bills,  581:  Thompson  on 
Bills,  311. 

28Dennistoun  v.  Stewart.  17  How.  006:  Thompson  on  Bills,  312;  Story 
on  Bills.  §§  278,  283. 


230  rKOTKST    AND    .NOTICK    OF    DISIIOXOK.        §§  352,  353. 

^  352.  What  certificate  must  contain. —  The  protest,  or, 
nun'c  strictly  s^pealdng,  the  notarial  certiticate  thereof, 
should  set  forth:  (1)  The  time  of  preseiitmeiit ;  (2)  the 
place  of  presentment;  (3)  the  fact  and  manner  of  present- 
ment; (4)  the  demand  of  payment;  (5)  the  fact  of  dishonor; 
(6)  the  name  of  the  party  by  whom  presentment  was  made; 
and  (7)  the  name  of  the  person  to  whom  presentment  was 
made.^^ 

§  353.  Time,  place,  and  manner  of  presentment  and  demand. 
— ■  It  is  essential  that  the  time  of  presentment  and  demand 
should  affirmatively  appear  upon  the  face  of  the  certificate, 
and  it  has  been  accordingly  held  that  if  the  certificate  state 
that  the  l)ill  was  "  this  day  protested,"  and  is  dated  on  a 
day  previous  to  or  after  the  day  of  maturity,  it  is  invalid 
upon  its  face;^''  and  while  the  certificate  should  state  that 
the  presentment  and  demand  were  made  during  the  usual 
business  hours,  it  is  not  absolutely  essential,  because  it  will 
be  presumed  that  the  presentment  Avas  made  at  the  proper 
time  of  the  day.^^ 

If  the  instrument,  by  its  terms,  is  payable  at  a  specified 
place,  the  certificate  is  insufficient  unless  it  state  that  pre- 
sentment and  demand  were  made  at  such  place  ;^^  but  if  no 
place  of  payment  is  named  the  certificate  need  not  state  at 
what  place  it  was  presented. 

The  presentment  of  the  bill  and  the  demand  of  payment 
should  be  separately  stated.  The  usual  expression  of  the 
certificate  is,  that  the  notary  "  did  exhibit  said  bill,"  and  it 
is  certain  that  there  must  be  some  expression  importing 
ex  vi  termini  that  the  bill  was  presented  to  the  drawee  or 
acceptor. ^^  The  mere  statement  that  payment  was  "  de- 
manded "  has  been  held  by  the  United  States  Supreme  Court 
to  be  insufficient  in  itself,  because  not  necessarily  implying 

29  Daniel  on  Negotiable  Instruments,   §  950. 

SOWalmsley  v.  Acton,  44  Barb.  312. 

SlBurbank  v.  Beach,  1.5  Barb.  .320:  Skelton  v.  Dunstan,  02  111.  49. 

32  People's  Bank  v.  Brooks,  31  Md.  7. 

33  Union  Bank  v.  Fowlkes,  2  Sneed,  555;  Bank  of  Verpennes  v.  Cam- 
eron. 7  ]3arb.  14.3. 


§§  354,  :555.  I'lioTEsT.  231 

a  "  presentment  also."  •"  lint  there  can  be  no  legal  demand 
without  presentment,  and  the  term  ''  demanded  "  has  been 
considered  surticient  in  Louisiana.^'^  The  mere  statement  of 
"  presentment  "  is  not  in  itself  sufficient  without  al^^o  a  state- 
ment  of   demand.""' 

§  354.  Name  of  person  to  whom  presented  and  fact  of  dis- 
honor must  be  stated. —  The  luune  of  the  person  upon  whuiu 
demand  was  made  should  be  stated,  es])ecially  when  it  was 
not  made  at  the  place  of  business  of  the  drawer  or  acceptor. 
In  the  latter  case,  it  is  sufficient  to  describe  the  person  as  a 
clerk  or  person  in  charge. •''^  If  a  finn  were  the  drawer  or 
acceptor,  it  would  be  fatally  defective  in  not  stating  the 
name  of  the  person  on  whom  demand  was  made,  as  well  as 
that  he  was  a  member  of  the  finn.^^ 

If  the  bill  is  payable  at  a  bank,  nothing  more  need  b<' 
stated  than  that  the  notary  presented  it  and  deuuiiuled  ])ay- 
ment  at  the  bank,  and  that  it  was  refused,  without  stating 
the  name  of  the  person  or  officer  of  the  bank  to  whom  it  was 
presented. ^^ 

The  dishonor  of  the  bill  must  be  stated,  and  it  is  usually 
expressed  in  the  phrase  that  the  person  to  whom  it  was  pre- 
sented "  answered  that  it  would  not  be  accepted  or  paid," 
or  that  such  person  "  refused  to  accept  or  pay  it,"  or  some 
such  language.  If  it  does  not,  in  some  terms,  inform  the 
party  of  the  dishonor,  it  is  fatally  defective.  But  it  is  not 
material  what  words  are  used."*^ 

§  355.  Protest  as  evidence. —  The  original  instrument  of 
protest,  or  a  duly  authenticated  copy,  is  respected  by  the 

34  Musson  V.  Lake,  4  How.  262;  Knickerbocker  Life  Ins.  Co.  v.  Pen- 
dleton, 115  U.  S.  347. 

35  Nott  V.  Beard,  IG  La.  308. 

:{«Nave  v.  Richardson,  30  Mo.  130;  Farmers"  Bank  v.  Allen,  IS  Md. 
475. 

37  Nelson  v.  Fotterall,  7  Leigh,  179;  Slainback  v.  Bank  of  Virginia,  11 
Gratt.  260. 

38  Otsego  County  15aiik  v.  Wutcm.  IS  Barb.  290. 

39  Hildeburn  v.  Turner.  6  How.  69. 

40  Taylor  v.  Bank  of  Hlinois,  7  T.  B.  Mon.  576;  Arnold  v.  Ivinlock,  .'■)0 
Barb.  44 :  Littledalc  v.  Maberry,  43  Me.  264. 


'2o2  I'ROTEST    AND    NOTICE    OF    DISHONOK.  §  356. 

courts  of  a  foreign  country,  and  -whenever  admissible  in 
testimony  is  regarded  as  prima  facie  evidence  of  all  the 
facts  therein  stated,  so  far  as  they  come  within  the  scope 
of  the  notaiy's  duty  in  making  the  presentment  and  demand 
and  protest."*^  But  it  is  prima  facie  evidence  only,  and 
any  statement  made  in  the  protest  may  be  rebutted  by  any 
competent  testiinony  to  the  contrary/^  But  as,  by  the  law 
merchant,  the  protest  is  only  necessaiy,  or  receivable  as  evi- 
dence of  (lislioiior,  ill  the  case  of  foreign  bills  or  of  indorsed 
notes,  which  are  of  the  nature  of  foreign  bills  and  come 
within  the  reason  of  the  law  respecting  them,  the  protest 
of  an  inland  l^ill  or  of  an  inland  promissory  note  is  not  evi- 
dence of  dislionor  in  a  foreign  State,  although  it  may  be 
in  the  State  where  the  dishonor  occurred  by  statute.^^  And 
where  a  State  statute  makes  the  protest,  when  executed  by 
a  notary  of  that  State,  evidence  as  to  demand  and  notice,  it 
does  not  authorize  the  notary  to  act  beyond  its  territorial 
limits,  or  accord  the  same  eifect  to  his  act  when  beyond 
them."* 

§  356.  Evidence  only  of  facts  that  are  and  should  be  stated. 
— •  The  admission  of  the  certificate  of  protest  as  evidence 
only  makes  it  evidence  of  such  facts  as  it  should  and  does 
distinctly  state."^  The  purpose  of  the  certificate,  as  it  has 
been  seen,  is  to  enable  th©  plaintiff,  by  this  species  of  docu- 
mentary evidence,  to  prove  all  of  the  essential  requirements 
of  a  formal  and  legal  presentment  of  the  instrument  for  ac- 
ceptance or  payment,  and  that  due  demand  was  made  and 
that  the  bill  or  note  was  in  fact  dishonored.  It  follows, 
therefore,  that  the  certificate  of  protest  can  be  taken  as  evi- 
dence only  as  to  the  essentials  stated,  and  hence  the  cer- 
tificate is  not  evidence  of  any  collateral  facts  which  may 

41  Townslpy  v.  Snmerall,  2  Pet.  170;  Chase  v.  Taylor,  4  Harr.  &  J.  54; 
Insurance  Co.  v.  Wilson,  29  W.  Va.  547. 

42  Dickens  v.  Beal,  10  Pet.  582;  Howard  Bank  v.  Carson,  50  Md.  27; 
Applegarth  v.  Abbott.  04  Cal.  450. 

43  Dutchess  County  Bank  v.  Ibbottson,  5  Den.  110;  Kirtland  v. 
Wanzer,  2  Duer,  278. 

44  Dutchess  County  Bank  v.  Ibbottson,  5  Den.  110. 
4.^  Daniel  on  Negotiable  Instruments,  §   962. 


g  357.  i'KOTf:.sT.  2o3 

be  stated  in  it.  Tlnis,  if  it  statu  that  the  reason  given  by 
the  drawee  lor  uonacoeptauee  was,  that  he  had  no  etiects 
or  funds  of  the  drawer,  it  is  no  evidence  of  tlie  want  of 
eliects  or  funds/''  Nor  is  it  evidence  that  the  drawee  ex- 
pressed his  willingness  to  pay  in  certain  bank  bills;"*'  nor  of 
the  manner  and  service  of  the  notice  of  dishonor,  unless 
by  statute  such  evidence  is  made  admissible.^** 

§  357.  Presumptions  in  favor  of  protest;  evidence  to  supply 
omissions. —  JJut  legal  i)rcsuiui)ti()ns  arc  made  in  favta*  of  the 
protest  under  pro})er  circumstances.  Thus,  when  the  cer- 
tificate of  protest  states  that  demand  was  made  of  the  clerk 
of  the  drawee,  found  at  his  office  or  place  of  business,  the 
drawee  himself  being  absent,  it  is  evidence  not  only  of  the 
fact  of  demand,  but  also  that  the  ])crson  named  was  the 
<lraweo's  clerk,  duly  authorized  to  refuse  acceptance  or  ]>ay- 
ment.'*^  And  it  would  be  presumed,  if  not  stated,  that  the 
drawee  was  absent. '^'^  So  (where  it  is  evidence  as  to  no- 
tice), if  it  state  that  notice  was  left  "  at  the  indorser's  desk 
in  the  custom  house,  he  being  absent,  Math  a  pereon  in 
charge,"  it  is  prima  facie  evidence  that  such  was  his  place 
of  business,  and  that  it  was  properly  left  there,  it  not  ap- 
pearing that  better  service  could  have  been  made.^^  So, 
if  it  states  demand  at  his  office  or  place  of  business,  of  his 
bookkeeper,  or  agent,  or  clerk,^"  it  is  evidence  that  such 
person  was  the  drawee's  agent. 

"When  the  protest  has  been  made  at  the  proper  time  and 
place,  and  in  the  proper  manner,  but  does  not  upon  its  face 
make  all  the  statements  necessary  to  prove  due  denuiud  and 
notice,  parol  e\ndence  is  admissible  to  supply  the  omissiou, 

•leDakin  v.  Graves,  48  N.  H.  45;  Dumont  v.  Pope,  7  Blackf.  3C7. 
47Maccoun  v.  Atchafalaya  Bank,  13  La.  .342. 

•*s  Walker  v.  Turner,  2  Gratt.  536;  Bank  of  Vergennes  v.  Cameron, 
7  Barb.  144. 

49  Nelson  v.  Fotterall.  7  Leij;li,  170;  Stainhack  v.  Bank  of  Virginia,  11 
Gratt.  2G0. 

50  Gardner  v.  Bank  of  Tennessee,  1  Swan.  420. 

51  Bank  of  Commonwealth  v.  Mndgett,  44  X.  Y.  514. 

52  Phillips  V.  Poindexter,  18  Ala.  579;  Dickerson  v.  Turner.  12  Ind. 
223;  Bradley  v.  Northern  Bank,  16  Ala.  259. 


2:34  I'KOTKST    AXD    NOTICE    OF    DlSllUXOK.       §§  358,  359. 

provided  it  be  iu  furtherance  of,  and  not  inconsistent  witli 
or  contrary  to,  the  statements  that  are  made  in  the  protest. 
Thus,  where  the  protest  stated  a  demand  of  the  cashier,  but 
omitted  to  state  that  the  note  was  in,  or  the  cashier  at  the 
bank,  it  was  held  admissible  to  prove  these  facts  by  parol 
testimony.^^ 

SECTION  n. 

NOTICE  OF  DISHONOR. 

§  358.  Necessity  of  notice ;  general  rule. —  When  a  negoti- 
able bill  or  note  is  dislionored  by  nonacceptance  on  present- 
ment for  acceptance,  or  by  nonpayment  at  its  maturity,  it 
is  the  duty  of  tlie  holder  to  give  immediate  notice  of  such 
dishonor  to  the  drawer,  if  it  be  a  bill,  and  to  the  indorser, 
whether  it  be  a  bill  or  note.  The  party  primarily  liable  is 
not  entitled  to  notice,  for  it  was  his  duty  to  have  provided 
for  paj-ment  of  the  paper;  and  the  fact  that  he  is  maker 
or  acceptor  for  accommodation  does  not  change  the  rule.^* 

ISTotice  is  not  due  to  any  party  to  a  bill  or  note  not  nego- 
tiable, the  rides  of  the  law  merchant  conceraing  notice  and 
protest  applying  to  none  but  strictly  commercial  instru- 
ments.^^ 

It  is  regarded  as  entering  as  a  condition  in  the  contract 
of  the  drawer  and  indorser  of  a  bill,  and  of  the  indorser  of 
a  note,  that  he  shall  only  be  bound  in  the  event  that  accept- 
ance or  payment  is  only  demanded;  and  he  notified  if  it  is 
not  made.  And  in  default  of  notice  of  nonacceptance  or 
nonpayment,  the  party  entitled  to  notice  is  at  once  dis- 
cliarged,  unless  some  excuse  exist  which  exonerates  the 
holder.^" 

§  359.  Failure  to  notify  party  entitled  to  notice  discharges 
debt  for  which  bill  was  drawn  or  indorsed. —  So  absolute  is 
the  necessity  for  notice  to  an  indorser,  in  order  to  charge 

5.'{Magoun  v.  Walker,  49  Me.  420;  Seneca  County  Bank  v.  Xeass,  5 
Den.  329. 

54  Hays  V.  N.  W.  Bank,  9  Gratt.  127. 

55  Pitman  v.  Breckenridpe.  3  Gratt.  129. 

56  Rothschild  v.  Currie,  41  Eng.  C.  L.  43;  Musson  v.  Lake,  4  How.  262. 


g  360.  NUTICK    i)h-    DlSIIONOl;.  'J'JO 

him,  that  it"  a  note  has  bccii  indorsed  to  the  holder  in.  cuii- 
ditional  payment  of  a  debt,  the  failure  to  give  notice  to 
the  indorser  will  not  only  discharge  the  indorser  as  a  party 
to  the  note,  hut  also  a  debtor  upon  the  original  considera- 
tion, even  thougli  it  be  secured  by  a  mortgage  or  deed  of 
trust.  The  note,  then,  is  made  an  absolute  discharge  of  his 
liabiUty,  and  the  indorsee  must  look  solely  to  prior  parties.^^ 
And  so  in  respect  to  the  drawer  of  a  bill  given  in  conditional 
payment. ^^  The  neglect  to  give  notice  to  the  drawer  of  a 
renewed  1)111  not  only  discharges  him  from  liability  to  pay 
that  bill,  but  discharges  him  from  liability  to  ])ay  tbc  prior 
bill,  to  satisfy  which  it  was  draA\ni;^^  and  this  although  it  he 
expressly  agreed  that  the  taking  of  such  second  bill  shall  not 
exonerate  any  of  the  parties  to  the  first  bill  until  actual 
payment.^ 

§  360.  Notice  may  be  verbal  or  written. —  The  notice  need 
not  be  in  writing;  it  is  suthciont  if  it  he  given  verbally;*''^  but 
for  precision  and  safety  written  notice  is  preferable.  Verbal 
notice  must  be  necessarily  confined  to  those  cases  in  which 
notice  is  directly  given  to  the  party  in  person,  or  is  sent  by 
a  messenger  to  his  place  of  business  or  residence.  It  seems 
that  a  verbal  notice  is  less  strictly  construed  than  a  written 
one,  especially  when  its  sufficiency  is  impliedly  admitted  by 
the  party's  response."^  Thus,  where  the  ludder's  clerk  told 
the  drawer  that  the  bill  had  been  duly  presented,  and  that 
the  acceptor  could  not  pay  it,  and  the  drawer  replied  that 
he  would  see  the  holder  about  it,  this  was  held  to  be  suffi- 
cient evidence  to  warrant  the  jury  in  finding  that  the  fact 
of  the  dishonor  of  the  note  was  sufficiently  communicated 
to  the  draw^er.^ 

57Shipman  v.  Cook.  1  Green,  2.51;  Peacock  v.  Purcell,  14  C.  B.   (N.  S.) 
728. 

58  Bridges  v.  Bony.  :{  Taunt.  loO:  Allan  v.  Eldred,  oO  Wis.  1.36;  Smith 
V.  Miller,  4.3  N.  Y.  171. 

59  Bridges  v.  Beny,  3  Taunt.  1.30;  Chilty  on  Bills  [•433.  444].  488,  500. 
60Reid  V.  Coats,  Bro.  P.  C. ;  Chilty  on  Bills  [*434].  488. 

61  Boyd's  Admr.  v.  City  Sav.  Bank,  1.5  Gratt.  .501 ;  First  Nat.  Bank  v. 
Ryerson,  23  Iowa,  508;  Stanley  v.  McElrath,  25  Pac.  16. 
*62  Phillips  V.  Gould,  8  C.  &  P.  3.55:  Byles  on  Bills   [*264],  211,  212. 
C3  Metcalfe  v.  Richardson,  11  C.  B.  1011. 


236  IT.OTEST    AND    XOTICE    OF    DISllOXOK.        §§  361,  362. 

Mere  kiiDwlodg-e  of  ilislionor  does  not  constitute  notice.'*^ 
jSTotice  signifies  more;  but  when  the  fact  of  dishonor  is  com- 
municated by  one  entitled  to  call  for  payment,  it  becomes 
notice,  as  it  is  then  to  be  inferred  t4iat  the  intention  is  to 
hold  the  jiarty  notified  responsible,^^ 

§  361.  Form  of  notice. —  Xo  particular  phrase  or  form  is 
necessary.  The  object  of  it  is  to  inform  the  party  to  whom 
it  is  sent:  1,  that  the  bill  or  note  has  been  presented;  2, 
that  it  has  been  dishonored  by  nonacceptance,  or  nonpay- 
ment; and,  3,  that  the  holder  considers  him  liable,  and  looks 
to  him  for  payment.  And  in  framing  the  notice,  all  that 
is  necessary  to  appnse  the  party  of  the  dishonor  of  the  in- 
strument is,  to  intimate  that  he  is  expected  to  pay  it. 

In  order  that  a  notice  should  answer  these  conditions,  and 
duly  intimate  dishonor  to  the  drawer  or  indorser,  it  should 
therefore,  either  expressly  or  by  just  and  natural  implica- 
tion, comprise  the  following  elements:  (1)  A  sufficient  de- 
scription of  the  bill  or  note  to  ascertain  its  identity.  (2) 
That  it  has  been  duly  presented  for  acceptance  or  payment 
to  the  drawee,  acceptor,  or  maker.  (3)  That  it  has  been 
dishonored  by  nonacceptance  or  nonpayment.  (4)  That  the 
holder  looks  to  the  party  notified  for  payment,^^ 

§  362.  Description  of  the  bill  or  note  dishonored —  The  no- 
tice should  describe  the  bill  or  note  in  unmistakable  terms; 
should  state  where  the  note  is,  that  the  party  notified  may 
find  it;  should  state  who  the  holder  is,  and  who  gives  the 
notice,  or  at  whose  request  it  is  given.  Such,  at  least  in 
theory,  are  the  requisites  of  a  proper  notice;  and  a  good 
business  man  should  never  neglect  to  comply  with  them. 
But  the  courts  are  not  strict  in  requiring  this  thorough  de- 
scription of  the  dishonored  instrument;  and  the  require- 
ments of  the  law  are  considered  as  satisfied  by  any  descrip- 

64  Juniata  Bank  v.  Hale,  16  Serg.  &  R.  157;  Bank  of  Old  Dominion  v. 
McVeigh,  29  Gratt.  559. 

esCaunt  v.  Thompson,  7  V.  B.  400;  Miers.  v.  Brown,  11  M.  &  W.  .372. 

WBank  of  Old  Dominion  v.  McVeigh,  29  Gratt.  558;  Thompson  v.  Wil- 
liams, 14  Cal.  102;  Story  on  Notes,  §  348;  Daniel  on  Negotiable  In- 
struments, §  973. 


g  363.  N(JTICK    OK    DlSilO.NUU.  2o7 

tion  which,  under  all  the  circumstances  of  the  case,  so  des- 
ignates the  bill  or  note  as  to  leave  no  doubt  in  the  mind  of 
the  party,  as  a  reasonable  man,  what  bill  or  note  was  in- 
tended.*'^ Story  says  that  "  the  description  of  the  note 
should  be  sufficiently  definite  to  enable  the  indorser  to 
know  to  what  one  in  particular  the  notice  applies ;  for  an  in- 
dorser may  have  indorsed  many  notes  of  very  different  dates, 
sums,  and  times  of  payment,  and  payable  to  different  per- 
sons, so  that  ho  may  be  ignorant'  unless  the  description  in 
the  note  is  special,  to  which  it  properly  applies  or  which  it 
<lesignates."  ^^  But  no  misdcscri]ition  of  the  amount,  or 
of  the  date,  or  of  the  names  of  the  parties,  or  of  the  time 
the  paper  fell  due,  or  other  defect  will  vitiate  the  notice, 
unless  it  misleads  the  party  to  whom  sent.®^ 

§363.  Statement  as  to  presentment  and  dishonor. —  Tt  was 
held  at  one  time  that  the  presentment  and  dishonor  of  the 
bill  or  note  must  appear  on  the  face  of  the  notice  "  in  ex- 
press terms  or  by  necessary  implication;  "  l)ut  the  later  and 
better  ruling  is  that  it  i3  sufficient  if  this  appear  by  "  rea- 
sonable intendment."  "*'  Though,  ]u-operly  understood,  the 
sense  of  the  two  phrases  is  pretty  much  the  same,  for  "  nec- 
essary imjdication  means  not  natural  necessity,  but  so  strong 
a  probability  that  an  intention  contrary  to  that  which  is 
imputed  cannot  be  supposed."  '^^  But  it  is  quite  clear  that  ir 
^\-ill  not  be  sufficient  merely  to  state  in  the  notice  the  fact 
of  nonpayment  of  the  bill  or  note,  without  stating  that  pay- 
ment was  demanded  of  the  maker,  drawee,  or  acceptor,  as 
the  case  may  be,  or  stating  some  legal  excuse  for  not  mak- 
ing such  demand.      Tt  should  state  whether  or  not  the  paper 

67  Gilbert  v.  Dennis,  3  Mcto.  (Mass.)  49.");  Shelton  v.  Braithwaite,  7 
i\r.  &  W.  436 ;  Glicksman  v.  Early,  47  X.  W.  272. 

08  Story  on  Notes,  §  349. 

€9  Bank  of  Alexandria  v.  Swan.  9  Pet.  33^;  Mills  v.  Bank  of  rnited 
States,  11  Wheat.  431;  Dennistoun  v.  Stewart,  17  How.  60G;  Smith  v. 
Whitinp,  12  :\rass.  6. 

TOTTodpcr  v.  Slcavcnson.  2  ^\.  &  W.  799;  Lewis  v.  (^omportz.  (I  M  ": 
W.  402:  Kdwards  on  Bills, -595. 

71  Wilkinson  v.  Adams,  1  Ves.  &  B.  400;  Hedijer  v.  Steavi-nson.  2 
M.  &  W.  799. 


238  I'KOTEST    AND    AOTICK    OF    DISIIOXOR.        §§  364,  365. 

has  beeu  presented  for  payment;  and  if  not,  why  not,  for 
the  reason  that  the  indorser  has  a  right  to  he  informed  of 
the  facts  on  which  the  liability  depends,  to  the  end  that 
he  may  judge  for  himself  whether  or  not  it  is  his  duty  to 
pay  it.^~ 

§  364.  Statement  that  holder  looks  to  drawer  or  indorser 
for  payment;  meaning  of. —  An  express  statement  in  the  no- 
tice to  this  elfect  was,  as  it  might  seem,  formerly  held  nec- 
essary ;'''^  but  the  prevailing-  rule  at  the  present  time  is,  that 
tlieniere  fact  of  giving  notice  to  the  party  implies  that  he 
is  looked  to  for  payment.''* 

On  this  subject  it  has  been  said  by  the  United  States  Su- 
preme Court:  "A  suggestion  has  been  made  at  the  bar,  that 
a  letter  to  the  indorser,  stating  the  demand  and  dishonor 
of  the  note,  is  not  sufficient,  unless  the  party  sending  it  also 
infonus  the  indorser  that  he  is  looked  to  for  payment.  But 
when  such  notice  is  sent  by  the  holder,  or  by  his  order,  it 
necessarily  implies  such  responsibility  over.  For  what  other 
purpose  could  it  be  sent  ?  AVe  know  of  no  rule  that  requires 
any  formal  declaration  to  l)e  made  to  this  effect.  It  is  suffi- 
cient, if  it  may  be  reasonably  inferred  from  the  nature  of 
the  notice."  ''' 

§  365.  By  whom  notice  given. —  The  notice  of  dishonor 
should  emanate  from  the  holder  of  the  instrument  at  the 
time  of  its  dishonor,  and  should  be  communicated  to  all  the 
parties  whom  ho  means  to  hold  hable  for  its  payment.  But 
it  is  not  absolutely  necessary  that  it  should  come  from  him, 
for  the  holder  is  entitled  to  the  benefit  of  notice  given  in 
due  time  by  any  party  to  the  instrument  who  would  be 
liable  to  him  if  lie,  the  holder,  had  himself  given  him  notice 
of  dishonor.''''"'     Thus  if  the  holder  duly  notifies  the  sixth  in- 

72  Page  V.  Gilbert,  GO  Me.  488;  Gilbert  v.  Dennis,  .3  ^kletc.   (Mass.)  405. 

73Tindal  v.  Brown,  1  T.  R.  169;  Solarte  v.  Palmer,  7  Bing.  530. 

74Mier8  v.  Brown,  11  M.  &  W.  .372;  Townsend  v.  Lorain  Bank,  2  Ohio 
St.  34.'):  Townsend  v.  Dry  Goods  Co.,  8.5  Mo.  ,508. 

75  Bank  of  United  States  v.  Carneal,  2  Pet.  .543. 

7fi  Chapman  v.  Keene,  3  Ad.  &  El.  193:  Bank  of  United  States  v.  God- 
dard,  5  Mason,  366;  StaflFord  v.  Yates,  18  Johns.  327. 


§  366.  NOTICE    OF    IMSIIO.NOK.  2'-VJ 

dorser,  and  he  the  fifth,  and  h<-  the  fonrth,  and  so  on  to 
the  tirst,  the  hitter  will  he  liahie  to  all  the  j)arties."  Where 
the  holder  has  duly  notitied,  or  exercised  <lue  dilif:^ence  to 
notify  the  several  and  successive  indorsers,  and  an  interme- 
diate indorser  who  did  not  himself  notify  his  predecessors, 
takes  up  the  hill  or  note,  there  is  no  doubt  that  the  notice 
sent  them  by  the  liohlcr  to  whom  he  makes  payment  inures 
to  his  benefit,  i)rovided  it  actually  reached  them.''*  But  it 
has  been  observed  that  it  would  seem  to  be  still  unsettled 
whether  the  notice  inured  to  the  benefit  of  the  intcnnedi- 
ate  indorser,  when  the  holder's  dilie;ence  in  sending  notice 
did  not  secure  its  actual  reception. "**  It  is  certain  that  no- 
tice from  a  mere  stranger  is  insufficient,^"  and  it  is  equally 
well  established  that  a  party  to  the  bill  who  has  been  dis- 
charged by  laches,  and  who  could  not  in  any  event  sue,  can- 
not give  notice  for  his  own  or  another's  benefit,  he  being 
then  a  mere  stranger  to  the  paper. '^^ 

§  366.  Notice  by  agent. —  Notice  given  by  an  agent  is  the 
same  as  if  by  the  holder  liimself,  and  it  may  be  either  in  the 
agent's  name,  or  in  the  name  of  any  party  entitled  to  give 
notice. ^^  The  notary  to  whom  the  bill  or  note  has  been 
given  for  presentment  may,  as  the  agent  of  the  holder,  give 
notice;®^  but  it  is  no  part  of  his  official  duty;^"*  and  a  bank 
holding  a  bill  or  note  for  collection,  or  its  officers  or  agents, 
should,  as  a  matter  of  duty,  give  the  notice  necessary.^^   Any 

"  Hilton  V.  Shepherd,  6  East,  14;   Swayze  v.  Britton,  17  Kan.  C27. 

TSStaflord  v.  Yates,  18  Johns.  327. 

'9  1  Parsons  on  Notes  and  Bills,  G27. 

8»  Stanton  v.  Blossom,  14  Mass.  IIG;  Juniata  Bank  v.  Hale,  16  Serjr. 
&  R.  157;  Brailsford  v.  Williams,  15  Md.  150. 

81  Harrison  v.  Ru.«coe.  15  M.  &  W.  2.31;  Turner  v.  Leech,  4  B.  &  Aid. 
45 1  ;  Thompson  on  Bills,  358. 

82Woodthorpe  v.  Laws,  2  ]\I.  «S:  \\'.  109;  Harrison  v.  Buscoe,  15  M. 
&  W.  231 :   Benjamin's  Chalmers'  Di-jest,   182. 

83  8medes  v.  Utiea  Bank,  20  Johns.  372;  Shed  v.  Brett.  1  Pick.  401; 
Fulton  V.  McCracken,  18  Md.  528. 

84  Harrison  v.  Robinson,  4  How.  336;  Insurance  Co.  v.  Wilson.  20 
W.  Va.  548. 

85  0pden  V.  Dobbin,  2  Hall.  112;  Bank  of  Missouri  v.  Vaujzlian.  30 
^lo.  90. 


2-iO  PKOTEST    A-NI>    NOTICIO    OK    DlSllUNOK.  §  DOT. 

person  indeed,  in  whose  bands  the  bill  lawfully  is  may  give 
the  notice  as  holder  or  agent,  as  the  case  may  be,  and  if 
as  agent,  a  verbal  authority  from  the  holder  is  sufhcient.^*^ 
A  bank  or  banker  with  whom  a  bill  or  note  is  deposited  to 
present  for  acceptance  or  payment,  or  any  agent  to  whom 
it  is  indorsed  for  collection,  is  to  bo  regarded  as  a  distinct 
holder  for  the  puiposes  of  notice,  and  has  the  same  time  to 
notify  the  ])rincipal,  and  the  princi])al  the  prior  parties,  as 
if  such  bank  or  agent  were  the  real  o\\aier.'^^ 

If  the  holder  be  dead,  his  executor  or  administrator,  if 
there  be  one,  should  give  the  notice;  but  if  none  be  ap- 
jutiutod  at  tlu^  time  of  maturity,  notice  should  be  sen-t  within 
a  reasonable  time  after  an  appointment  is  made.^^ 

§  367.  To  whom  notice  should  be  given;  general  rule. — 
Each  indorser  of  a  bill  or  note  is  entitled  to  notice,  and  so 
also  is  the  drawer  of  a  bill  payable  to  a  third  party,  as 
bills  generally  are.^^  The  acceptor  of  a  bill  and  the  maker 
of  a  note  are  not  entitled  to  notice,  they  being  the  primary 
debtors,  nor  are  those  who,  from  their  iiTCgular  execution 
of  the  instrrmaent,  are  adjudged  joint  makers  or  sureties, 
their  contract  being  to  pay  in  default  of  the  principal,  at 
all  events.^  Where  there  are  several  successive  indorsers, 
the  holder  may,  and  ordinarily  does,  give  notice  to  all,  with 
a  view  to  preserve  his  recourse  upon  all.  But  he  is  not 
bound  to  give  notice  to  all,  in  order  to  bind  those  to  whom 
he  does  give  it.  He  may,  if  he  please,  give  notice  to 
any  one  or  more  of  the  indorsers,  who  are  then  made  liable 
to  him;  and  the  indorser  receiving  notice  must  then  notify 
antecedent  indorsers  in  order  to  assure  himself.''^  It  is  not, 
therefore,  necessary  for  the  notary  to  take  any  notice  of  the 

86  Cowperthwaite  v.  Sheffield,  1  Sandf.  416;   Story  on  Bills,  §  303. 

87  Bank  of  United  States  v.  Goddard,  5  Mason,  300;  Worden  v. 
Nourse,  30  Vt.  750;  Friend  v.  Wilkinson,  9  Gratt.  31. 

88  White  V.  Stoddard,  11  Gray,  38;  1  Parsons  on  Notes  and  Bills, 
444,  5,59. 

89  Joseph  V.  Salomon,  19  Fla.  623;  Sweet  v.  Swift,  05  Mich.  91. 

80  Fitch  V.  Citi/x-ns'  Nat.  Bank,  97  Ind.  212;  Ilofheimer  v.  Losen,  24 
Mo.  App.  657. 

oiCardwell  v.  Allen,  33  Gratt.  167;  Wood  v.  Callaghan,  01  Mich.  402. 


§§  ;>GS,  3G9.  xoTiCK  oi"  Disiioxou.  241 

residence  of  the  maker  of  the  note,  or  make  any  inquiry  us 
to  the  residence  of  any  of  the  indorsers  except  the  last.  A 
different  rule  would  obstruct  business,  and  is  not  required.**- 

§  368.  Notice  to  agent. —  >,'otice  to  the  agent  of  the  party 
for  the  general  conduct  of  his  business  is  the  same  as  if 
given  to  the  principal  in  person.**^  But  notice  to  the  party's 
attorney  or  solicitor,  unless  he  is  specially  authorized  to  re- 
ceive it,  is  insufhcient.^'*  If  an  agent  draw  a  bill  in  his  own 
name,  notice  should  be  given  to  him,  and  if  given  to  his 
principal  it  will  be  insufficient,  he  being  no  ])arty  to  the 
pa]>er.^''  If  the  paper  be  sigued  by  a  duly  authorized  agent 
in  the  principal's  name,  notice  should  be  given  to  the  i)riu- 
cipal,  who  is  the  party  liable.'"'  AVhether  or  not  the  agent 
would  be  regarded  as  authorized  to  receive  it.  is  questioned; 
and  it  has  been  decided  that  authonty  to  iudorse  is  not  au- 
thority of  itself  to  receive  notice."^  The  mere  fact  that  :i 
party  is  the  "  financial  agent  "  of  his  principal  does  not  of 
itself  constitute  him  an  agent  to  receive  notice.^^  An  agent 
constituted  before  the  breaking  out  of  a  war  which  severs 
him  from  his  principal,  with  authority  to  receive  notice  of 
dishonor,  may  continue  to  act  for  that  purpose;  and  notice 
served  upon  him  will  suffice  to  charge  the  indorser.^^  Tf  a 
note  be  payable  l)y  instalments,  demand  and  notice  as  to 
the  last  instalment  l)inds  the  indorser  as  to  that.* 

§  369.  As  to  partners  and  joint  indorsers. —  If  the  drawers 
be  a  partnership,  notice  to  any  one  partner  is  sufficicnt." 

02Lawson  v.  Farmers"  Bank,  1  Ohio  St.  206;  Warren  v.  Oilman.  17 
Me.  3G0. 

9- Crosse  v.  Smith,  1  Maule  &  S.  545;  Lake  Shore  Nat.  Bank  v.  Col- 
liery Co.,  58  N.  Y.  S.  C.  08. 

i»4  Louisiana  State  Bank  v.  Ellery,  10  :Mart.  87;  Crosse  v.  Smith.  1 
Maule  &  S.  545. 

05  Grosvenor  v.  Stone,  S  Pick.  79. 

96  Clay  V.  Oakley,  17  Mart.  137. 

9T  Valk  V.  Gaillard,  4  Strob.  99;  Wilcox  v.  Routh,  9  Smedes  &  M.  470. 

98  New  York,  etc.,  Co.  v.  Selma  Sav.  Bank,  51  Ala.  305. 

99  Hubbard  v.  ^latthews,  54  N.  Y.  50. 
1  Eastman  v.  Turman,  24  Cal.  383. 

2Go\van  v.  Jackson,  20  Johns.   170;   People's  Bank  v.  Keech,  20  Md. 
521;  St,  Louis  Bank  v.  Altheimer,  91  Mo.   190. 
16 


242  VROTEST    AXD    X'OTICE    OF    DISHONOR.  §  370. 

And  it  matters  not  that  the  iirm  was  dissolved  by  war,  and 
that  one  of  the  partners  was  separated  from  the  other  by 
a  hostile  line.^  If  an  indorser  be  a  nuunber  of  the  finn,  the 
notice  to  the  firm  is  snfiicient/  The  general  rule,  that  no- 
tice to  any  partner  is  notice  to  the  firm,  is  subject  to  this 
exception:  that  where  one  member  resides  at  a  distance, 
and  another  at  the  place  of  protest,  notice  must  be  given  to 
the  latter.  At  least,  it  has  been  so  held;^  but  if  the  draw- 
ers or  indorsers  are  joint,  but  not  partners,  notice  must  be 
given  to  each  of  them,  and  notice  to  one  only  would  not 
even  l)ind  him." 

§  370.  Notice  to  indorsers  for  collection,  and  to  accommoda- 
tion and  fixed  drawers  and  indorsers. —  The  rule  requiring 
notice  to  the  indorsers  of  bills  and  notes  extends  to  all  in- 
dorsers, whether  they  are  indorsers  for  value  or  mere  agents 
for  collection.  A  banking-house,  or  other  agent,  merely 
passing  title  to  the  bill  or  note  by  indorsement  for  purposes 
of  collection,  stands  on  the  same  footing  as  any  other  in- 
dorser in  respect  to  notice.'^  "  In  regard  to  notice,  each, 
branch  of  a  bank  is  considered  a  separate  establishment."  ^ 
But  where  the  indorsement  upon  the  bill  or  note  was 
made  before  its  maturity,  and  after  the  bill  or  note  had 
been  transferred  with  it  upon  it,  and  had  been  returned  to 
the  indorser;  and  he,  after  paying  it,  and  after  the  liability 
of  all  parties  had  been  fixed,  and  reissued  it  \vith  their  in- 
dorsements upon  it,  the  general  rule  requiring  demand  of 
the  maker,  and  notice  to  the  indorser,  where  the  indorse- 
ment was  made  after  maturity,  in  order  to  charge  the  in- 
dorser, would  not  apply.     For  in  such  case  the  demand  had 

3  Hubbard  v.  :\Iatthews,  -54  N.  Y.  50. 

4  Rhett  V.  Poe,  2  How.  4.57. 

5  Hume  V.  Watt,  5  Kan.  34. 

6  Bank  of  United  States  v.  Bierne,  1  Gratt.  234;  Union  Bank  v.  Willis, 
8  Mete.   (Mass.)   512;  Bealls  v.  Peck,  12  Barb.  245. 

Tgeaton  v.  Sc-ovill,  18  Kan.  435;  Lynn  Nat.  Bank  v.  Smith,  132  Mass. 
227;  Butler  v.  Duval,  4  Yerp.  265. 
aClode  V.  Bayley,  12  M.  &  W.  51. 


^  371.  NOTICE  (jr  DisnoxoR.  243 

Leeii  made,  the  notice  given,  and  his  lia])ility  determined  be- 
fore lie  reissued  the  instrument." 

An  accommodation  drawer  or  indorser  is  as  much  euiithd 
to  notice  as  if  the  drawing  or  indorsing  was  done  for  value;'" 
but  if  the  drawer  or  indorser  be  himself  the  accommodated, 
instead  of  the  acconnnodatiug  party,  he  is  under  obligation 
to  take  u]>  the  bill  or  note,  has  no  remedy  on  doing  so 
against  any  other  party,  and  conseciuently  is  without  legal 
possibility  of  injury,   and  is  not  entitled  to  notice. '^ 

§  371.  If  drawer  or  indorser  be  dead  or  bankrupt. —  If  the 
party  entitled  to  notice  be  dead  at  the  linic  the  bill  or  note 
becomes  payable,  and  this  is  known  to  the  holder,  notice 
should  be  sent  to  his  executor  or  administrator,  if  there  be 
any,  and  it  can  be  ascertained  by  reasonable  inquiry  who 
or  where  he  is;  and  under  such  circumstances  notice  ad- 
dressed to  the  deceased  by  name  would  be  insufficient.^" 
Notice  addressed  to  the  "  legal  representative,"  in  a  case 
in  which  the  death  of  the  indorser  was  recent,  and  no  per- 
sonal representative  had  as  yet  qualified,  has  been  deemed 
suificieni ;''^  but  it  has  been  held  that  if  addressed  to  "the 
estate,"  it  would  not,  that  term  applying  as  well  to  the  heirs- 
at-law  as  to  the  executor  or  administrator.^^  And  where 
a  personal  representative  has  qualified,  and  is  known,  or 
could  be  ascertained  by  due  diligence,  it  would  not  be  suffi- 
cient to  address  notice  through  the  mail  to  "  the  adminis- 
trator," "  executor,"  or  '^  personal  representative,"  by  official 
designation  only,  as  it  might  lead  to  delay.     The  address 

9  Daniel   on  Negotiable  Instruments,   S   i^OT :    St.  .lolm  v.   Roberts,  31 
N.  Y.  441. 

10  Turner  v.  Samson,  2  Q.  B.  Div.  23;  Tliillnian  v.  Gueble,  32  La.  Ann. 
260;  Bralej'  v.  Buchanan,  21  Kan.  555. 

11  Daniel  on  Negotiable  Instruments,  §§  995?),  1085. 

12  Oriental  Bank  v.  Blake,  22  Piik.  206;  Cayuga  County  Bank  v. 
Bennett,  5  Hill,  236. 

13  Boyd's  Admr.  v.  City  Sav.  Bank.  15  Gratt.  501;  Pillow  v.  Harde- 
man, 3  Huniplir.  538. 

14  Cayuga  County  Bank  v.  Bennett.  5  Hill,  230;  Massachusetts  Bank 
V.  Oliver,  10  Cusli.  557. 


244         PKOTEST  AXI)  NOTICE  OF  DISHONOR.       §  372. 

shoiikl  be  to  such  party  by  name.^^     Notice  to  one  of  sev- 
eral executors  or  administrators  is  sufficient.^^ 

If  there  be  no  personal  representative,  notice  sent  to  the 
family  residence  of  the  deceased  will  be  sufficient  ;^^  and  it  is 
likewise  suflicient  if  notice  be  addressed  to  the  deceased, 
when,  without  negligence,  the  holder  is  not  aware  of  his 
death.^^' 

If  the  party  be  bankrupt,  it  is  best  to  give  notice  to  him, 
and  to  his  assignee  also.  If  there  be  as  yet  no  assignee  ap- 
pointed, notice  to  him  is  sufficient  ;^^  and  perhaps  it  might 
be  sufficient  even  if  one  had  been  appointed.^*^  If  given  to 
the  assignee  alone,  it  would  probably  be  sufficient.^ 

If  the  bankrupt  has  absconded,  notice  should  be  given  his 
assignee,  if  any  there  l)e;  and  if  there  be  none,  to  any  one 
representing  his  estate.^" 

§  372.  How  notice  must  be  served  when  parties  in  same  place. 
—  If  the  notice  is  to  be  given  to  a  party  to  whom  it  is  not  nec- 
essary or  allowable*  to  transmit  it  by  mail,  it  should  be  sent 
to  or  given  at  his  place  of  domicile  or  place  of  bus-iness,  and 
delivery  of  notice  at  either  ^vill  be  sufficient,^^  even  when 
they  are  in  different  towns.^*  When  the  party  keeps  a  count- 
ing-room or  other  business  place,  and  has  a  private  residence 
also,  it  is  usual  to  send  notice  to  the  place  of  business  rather 
than  to  the  dwelling,  and  if  notice  is  so  sent  to  his  place 
of  business  during  hours  when  he  or  some  of  his  peo- 
ple  might   be   reasonably   expected  there,   it   is   sufficient; 

!■"•  Smalley  v.  Wright,  40  N.  J.  L.  471. 

I'i  Bealls  V.  Peck,  12  Barb.  245;   Lewis  v.  Bakewell,  G  La.  Ann.  .3.')9. 

17Goodno\v  V.  Warren,  122  Mass.  82;  Merchants'  Bank  v.  Birch,  17 
Johns.  2.5. 

18  Barnes  v.  Reynolds,  4  How.  (Miss.)  114;  Maspero  v.  Pcdesclaux,  22 
La.  Ann.  227. 

I'-iEx  jxtrtc  Moline,  19  Yes.  216. 

2fJ  1  Parsons  on  Notes  and  Bills,  .500. 

21  Callahan  v.  Kentucky  Bank,  82  Ky.  231. 

22  Rhode  V.  Proctor,  4  B.  &  C.  517. 

23  Williams  v.  Bank  of  United  States,  2  Pet.  90;  Nevins  v.  Bank  of 
Lansingburg,  10  Mich.  547;   Ireland  v.  Kip,  10  Johns.  491. 

24  Bank  of  Geneva  v.  Hewlett,  4  Wend.  328;  Conner  v.  Remer,  21 
Wend.  10. 


§  373.  NOTICE    OF    DISJIONOK.  243 

and  if  no  one  bo  there  in  the  usnal  hours,  and  in  the  ordi- 
nary eourse  of  business,  it  is  not  neeessary  to  leave  a  written 
notice,  or  to  send  to  the  house  where  he  lives,  or  to  n»ak(^ 
farther  search  for  him,  or  in(iuiries  about  him,  it  being- 
considered  that  he  has  dispensed  with  notice. ~°  Notice  h'ft 
with  a  clerk,  or  person  in  charge,  at  the  party's  place  of 
business,  in  his  absence,  or  at  his  place  of  business,  without 
proof  as  to  the  person  with  whom  it  was  left,  is  sufficient,^® 
and  proof  that  such  person  was  not  the  party's  agent  has 
been  held  irrelevant,  notice  being  left  at  the  right  place.^^ 
Hence,  leaving  it  with  his  private  secretary  at  his  public 
office  is  sufficient."'^  If  service  be  sought  on  the  party  at 
his  dwelling,  it  is  sufficient  to  leave  notice  with  his  wife,  or 
with  any  other  person  on  his  premises.^ 

§  373.  What  is  meant  by  expression  "  same  place." —  Ac- 
cording to  one  class  of  cases,  all  persons  are  to  be  regarded 
as  of  the  same  place  who  receive  their  mails  through  the 
same  post-office;  and  although  the  party  entitled  to  notice 
may  in  fact  have  his  residence  several  miles  distant  in  the 
country,  those  cases  do  not  admit  the  post-office  in  the  city 
or  town  where  he  gets  his  mail  matter,  and  where  the  holder 
is  to  be  used  as  a  means  of  conmiunicating  notice.  They 
base  the  decision  upon  the  doctrine  that  the  mail  is  to  be 
used  as  a  means  of  transmission  only,  and  not  as  a  place 
of  deposit.^*'  The  courts  of  Tennessee,  New  York,  ]^Iassa- 
chusetts,  Louisiana,  Mississippi,  A'^ii-ginia,  and  Xebr«ska  sus- 
tain this  view. 

25  Goldsmith  v.  Blane.  1  Maule  cl  S.  ;w4 ;  State  Bank  v.  Hennon.  16 
Mart.  226. 

2C  Mercantile  Bank  v.  ^McCarthy,  7  Mo.  App.  318:  Commercial  Bank 
V.  Gove,  15  La.  113;  Mechanics"  Banking  Assn.  v.  Place,  4  Duer,  212. 

27  .Jacobs  V.  Town,  2  La.  Ann.  0G4. 

2S  Merz  v.  Kaiser,  20  La.  Ann.  377. 

29  Blakely  v.  Grant,  6  :Mass.  386 ;  Fisher  v.  Evans,  5  Binn.  542 ;  CVom- 
well  V.  Hynson,  2  Esp.  511. 

•■50  Shelburne  Falls  Nat.  Bank  v.  Townsley,  102  Mass.  177:  Barker  v. 
Hall.  Mart.  &  Y.  183:  Ireland  v.  Kip,  10  Johns.  490;  Forbes  v.  Omaha 
Nat.  Bank,  10  Nebr.  338:  Louisiana  State  Bank  v.  Rowell.  6  Mart.  .■")06; 
Patrick  v.  Beazley.  (1  How.  (Miss.)  609:  Brown  v.  Bank  of  Abinirdon 
(Va.),  7  S.  E.  357. 


246  PROTEST    AND    NOTICE    OV    DISIIONOK.  §  374. 

According  to  auotlier  class,  if  the  party  has  no  regular 
place  of  business  in  the  city  or  town  where  the  holder  re- 
sides or  the  instrument  is  payable,  and  resides  some  distance 
in  the  country,  but  receives  his  mails  in  the  city  or  town, 
the  mere  fact  that  he  would  get  the  letter  out  of  the  same 
office  it  was  put  in,  instead  of  a  distant  one,  would  not 
vitiate  the  method  of  communication,  every  reason  of  con- 
venience and  certainty  which  apply  in  one  case  applying 
with  equal  force  in  the  other.  To  hold  otherwise  would 
require  the  holder  to  give  personal  notice  to  an  indorser 
wdio  did  not  reside  in  the  same  place  as  himself,  or  to  send 
it  by  mail  to  a  post-office  where  the  indorser  did  not  usually 
receive  his  letters. 

The  Supreme  Court  of  the  United  States  has  adopted  this 
view  in  preference  to  the  more  exacting  view  of  the  authori- 
ties referred  to;  and  has  held  that  where  the  plaintiff  bank 
at  which  the  note  was  payable  was  located  in  Georgetown, 
and  the  indorser,  when  the  note  fell  due,  resided  two  or 
three  miles  distant  in  the  country,  having  removed  after 
it  was  made  from  Washington  city,  but  received  his  letters 
through  the  Georgetown  post-office,  notice  deposited  in  the 
Georgetown  post-office,  addressed  to  him  at  that  place,  w^as 
sufficient. "^^ 

§  374.  Exceptions  to  the  rule. —  To  the  rule  that  wdien  the 
holder  and  the  drawer  or  indorser  live  in  the  same  place 
service  of  the  notice  of  dishonor  must  be  personally  made, 
are  the  follo\\ing  exceptions:  (1)  If  the  party  addressed 
actually  receives  the  notice  in  due  season,  or  it  can  he  prop- 
erly inferred  by  the  jury  from  the  facts  of  the  case  that 
the  notice  was  received,  the  mere  manner  of  its  transmis- 
sion is  wholly  immaterial,  whether  transmitted  by  mail, 
telegraph,  or  otherwise.^^  The  distinction  between  the  dif- 
ferent modes  of  giving  notice  is  this:  that  where  the  holder 

31  Bank  of  Columbia  v.  Lawrence,  1  Pet.  .578 ;  Bank  of  United  States 
V.  Norwood,  1  Ilarr.  &  J.  423:  Cist  v.  Lybrand,  .3  Ohio.  307;  Jones  v. 
Lewis,  8  Watts  &  S.  14. 

32Hyslop  V.  .Tones.  3  Mclean,  69:  Dicken  v.  Hall,  87  Pa.  St.  379;  First 
Nat.  Bank  v.  Wood,  51  Vt.  471. 


g  ;J75.  NoTicK  OK  j>isiioNou.  247 

and  indorser  reside  in  dili'erent  places,  the  fornior,  if  he 
deposits  the  notice  in  the  post-othce  in  (hio  season,  has  no 
further  burden  on  liini  as  to  tlic  actual  receijtt  of  it  Ity  tht^ 
hitter;  but  where  both  parties  Uve  in  the  same  town,  the 
sender  of  the  notice  is  bound  to  show  that  it  was  actually 
received  by  the  indorser  in  due  season.^^  (2)  Where  letter 
carriers  are  employed  in  the  postal  service  to  deliver  letters 
at  the  houses  or  places  of  business  of  parties,  who  usually 
receive  their  letters  through  them.  In  siicli  cases,  if  tlie 
notice  be  deposited  in  the  post-office  early  enough  in  the 
day  to  go  by  the  letter-carrier,  on  the  same  day,  to  the 
party  entitled  to  notice,  it  -will  be  deemed  sufficient. ■^■*  (3) 
When  the  party  entitled  to  notice  has  recently  died,  and 
no  personal  representative  has  been  appointed. ^^  (4)  AVhere 
there  are  several  distinct  villages  or  post-offices  in  a  town, 
between  which  there  is  a  regular  intercourse  by  mail,  it 
may  be  employed  for  the  conveyance  of  notice,  not\\'ithstand- 
ing  the  fact  that  the  parties  reside  in  the  same  general 
municijiality.^*' 

^  375.  How  notice  must  be  served  when  parties  in  different 
places. —  When  the  parties  reside  in  different  places,  or  the 
party  entitled  to  notice  resides  at  a  place  other  than  the  par- 
ticular place  at  which  the  bill  or  note  is  payable,  it  will,  in 
general,  be  sufficient  for  the  holder  to  put  notice  of  dishonor 
in  the  post-office,  addressed  to  the  party  entitled  thereto, 
wathin  the  proper  time.  This  done,  his  duty  is  discharged, 
and  it  is  not  necessary  that  the  notice  should  be  received  — 
the  holder  not  being  responsil)le  for  any  miscarriage  of  the 
inail.^^  But  the  notice  must  be  properly  addressed  to  the 
party  at  a  distance  entitled  to  receive  it ;  and  if  it  be  directed 
to  "  Darcy  "  as  indorser,  instead  of  "  Darey,"  the  correct 

33  Cabot  Bank  v.  Warner,  10  Allen,  oJi. 

34  Shoemaker  v.  Mechanics'  Bank,  59  Pa.  iSt.  S.'J ;  Walters  v.  Brown.  I.t 
Md.  292. 

35  Boyd's  Admr.  v.  City  Sav.  Bank,  15  Gratt.  501. 

30  Bell  V.  Hagerstow-n  Bank,  7  Gill.  21fi;  Shaylor  v.  Mix.  4  Allen.  351  ; 
Gist  V.  Lybrand,  .3  Ohio,  307. 

37Bussard  v.  Levering,  6  Wheat.  102;  Shelburne  Falls  Nat.  Bank  v. 
Townsley,  102  Ma.ss.  177. 


248  I'KOTEST    AXD    INOTICE    OF    DISIIOKOK.  §  370. 

name,  it  is  negligence  which  discharges  him.^*  The  notice 
should  be  directed  to  the  post-office  at,  or  nearest  to,  the 
party's  place  of  residence,  unless  he  is  accustomed  to  re- 
ceive his  letters  at  another  post-office,  in  which  case  it  should 
be  directed  thereto.^  If  he  live  at  one  place  and  has  his 
place  of  business  at  another,  notice  may  be  sent  to  either;'*^ 
and  the  place  where  the  party  actually  resorts  to  for  his 
letters  is  always  the  appropriate  one,  when  known,  for  no- 
tice to  be  addressed  to,  whether  or  not  the  party  lives  there 
or  has  there  his  place  of  business.*'  If  the  place  be  that 
of  his  actual  residence  at  the  time,  it  need  not  be  his 
domicile.*^ 

§  376.  Address. —  The  indorser  has  a  right  to  direct  to 
what  postal  address,  or  to  what  place,  notice  shall  be  sent, 
and  it  ^vill  always  suffice  to  pursue  his  direction  although 
he  may  have  a  place  of  residence  or  business  elsewhere.*^ 
Sometimes  the  place  to  which  he  desires  notice  to  be  sent 
is  designated  by  memorandum  on  the  instrument,  as,  for 
example,  by  writing  the  words  "214  E.  18th  Street,"  or 
by  adding  his  address  to  his  signature,  as,  for  instance, 
"  Memphis,  Tenn.,"  or  "  Walnut  Bend,  Arkansas,"  or  "  13 
Chambers  Street,  New  York,"  or  "  W.  Moors,  Manchester," 
or  "  T.  M.  Barron,  London,"  and  he  thereby  impliedly 
directs  notice  to  be  sent  to  the  place  designated.**  It  is 
not  sufficient  to  direct  notice  generally  to  a  parish,  county, 
or  township  within  which  there  arc  a  number  of  post- 
38  Darey  V.  Jones,  1.3  Vroom,  28. 

39  Bank  of  Columbia  v.  Lawrence,  1  Pet.  582;  National  Bank  v.  Cade, 
73  Mich.  449;  Northwestern  Coal  Co.  v.  Bowman,  69  Iowa,  103. 

^I'-'Bank  of  United  States  v.  Carneal,  2  Pet.  549;  Reid  v.  Payne,  16 
Johns.  218. 

41  Farmers'  Bank  v.  Gunnell,  26  Gratt.  137;  Lindenberger  v.  Beall,  6 
Wheat.  104:  Munn  v.  Baldwin,  0  Mass.  316. 

42  Young  V.  Durgin,  15  Gray,  264. 

43  Bell  V.  Hagerstown  Bank,  7  Gill,  216;  Dicken  v.  Hall,  87  Pa.  St. 
379;  Tyson  v.  Oliver,  43  Ala.  455. 

44'Bartlett  v.  Robinson,  39  N.  Y.  187;  Carter  v.  Union  Bank.  7 
Ifumphr.  .548;  Peters  v.  Hobbs,  25  Ark.  67;  Morris  v.  Husson,  4  Sandf. 
93;  Mann  v.  Moors,  Ryan  &  M.  149;  Burmester  v.  Barron,  17  Q.  B.  828. 


§  370.  XOTICK    OF    DISllO.NOU.  249 

offices;'*^  b\it  it  has  been  held  that  it  was  sufficient  to  direct 
notice  to  the  party  at  the  shire  town  of  the  county,  al- 
though there  was  a  post-office  nearer  to  him  which  he  was  in 
the  luibit  of  usiiiu."*"  Wlicre  there  are  two  post-offices  in 
the  town  where  the  i)arty  resides,  notice  may  be  directed  to 
the  town  f^enerally,  unless  the  holder  knows,  or  should 
know,  that  he  receives  his  letters  at  one  of  them,  in  which 
case  notice  should  be  directed  there. '*^  If  the  party  live 
in  one  place  and  have  his  place  of  business  at  another,  the 
holder  of  a  ]>ill  or  note  protested  at  a  third  i)lace  shoidd 
send  notice  to  the  place  at  which  he  usually  receives  his 
letters;'*^  but  if  the  holder  does  not  know  that  he  usually 
receives  at  the  place  where  he  is  engaged  in  business,  it 
will  be  sufficient  to  send  it  to  the  place  where  he  lives.^^ 
In  the  case  of  parties  residing  temporarily  in  a  certain  place 
—  members  of  Congress  or  of  a  State  Legislature  residing 
at  their  respective  capitals,  while  the  bodies  to  which  they 
belong  are  in  session,  for  instance  —  it  is  sufficient  an<l 
proper  that  notice  should  be  sent  to  them  at  such  place,  or 
left  there  at  their  place  of  residence  ;^'^  but  after  the  adjourn- 
ment of  the  session  the  rule  would  no  longer  apply,  and 
notice  should  be  sent  to  the  jiarty's  permanent  place  of 
residence.'^^  And  while  Congress  is  in  session  it  will  not 
be  sufficient  to  deposit  notice  for  the  member  in  the  post- 
office  of  the  Senate  or  House  of  Kepresentatives,  as  it  should 
be  served  personally  by  a  party  in  the  same  place  at  his 
residence,  or  where  he  niiuht  personally  1)0."''" 


«  Beenol  v.  Toiirnillon.  6  Rob.  (La.)  500. 

40  Weakly  v.  Bell,  9  Watts,  273;  Story  on  Bills,  §  297. 

47  Buiiingame  v.  Foster,   128  Mass.   125;   Saco  Nat.   Bank    v.  Sanborn. 
63  Me.  340. 

48  Bank  of  Geneva  v.  Howlett.  4  Wend.  328:  Reed  v.  Payne,  1(5  .Johns. 
218. 

49  Seneca  County  Bank  v.  Neass.  2  X.  Y.  442. 

50  Chouteau  v.  Webster,  6  Mete.  (Mass.)  1:  Graham  v.  Sangston.  1  Md. 
59;  Man-  v.  Johnson,  9  Yerg.  1. 

51  Bayley's  Adnir.  v.  Chubb.  10  Gratt.  284. 

52  Hill  V.  Xorvell.  3  McLean,  583. 


250  I'KOTEST    AXD    AOTICE    OF    DISHONOR.  §  377. 

§  377.  Address,  continued;  several  post-offices,  large  cities, 
etc. — •  Where  there  are  two  or  three  po8t-oi3ices  at  which 
the  indorser  is  in  the  habit  of  receiving  his  letters,  notice 
may  be  sent  to  either ;"''"'  and  where  he  lives  at  equi-distance 
from  two  post-oftiees,  notice  addressed  to  one  will  suffice, 
althongh  ho  was  accustomed  to  receive  his  letters  at  the 
other. "^  Where  the  party  lives  in  the  United  States,  it  is 
especially  ini])ortant  in  sending  notices  by  mail  to  put  the 
full  address,  town  and  State,  as  there  are  many  cases  in 
which  the  same  name  is  applicable  to  towns  and  cities  in 
different  States.  An  omission  to  name  the  State,  where 
there  is  more  than  one  place  bearing  the  name  of  the  town, 
would  be  fatal  if  the  notice  were  not  duly  received  at  the 
right  place. ^'^ 

It  has  been  held  in  England  not  sufficient  to  address  the 
notice  to  a  person  at  a  large  town,  as,  for  instance,  to  "  AV. 
Haynes,  Bristol,"  without  specifying  in  what  part  of  it  he 
resides,  because  there  might  be  in  so  large  a  town  many 
persons  to  whom  so  general  an  address  might  apply,  the 
surname  alone  being  given  without  any  special  designation 
that  might  identify  him.^*'  But  unless  the  name  were  very 
common  —  John  Smith,  for  instance  —  an  address  to  a  large 
city,  giving  the  full  christian  name  as  well  as  the  surname, 
would  doubtless  be  regarded  as  sufficient.  And  in  Massa- 
chusetts, where  notice  was  addressed  to  "  Mrs.  Susan  Col- 
lins, Boston,"  it  w^as  held  sufficient  to  charge  her  as  indorser, 
it  not  appearing  that  there  was  any  other  person  of  the 
same  name.^^  The  soundness  of  the  doctrine  stated  in  the 
latter  case  has  been  doubted  by  some  courts  —  the  latter 
holding  that  such  an  address  would  be  prima  facie  insuffi- 
cient, even  though  the  town  to  \vhich  it  should  be  sent  was 
not  a  large  one  —  the  principle  being  that  numerous  per- 

53  Bank  of  the  United  States  v.  Carneal,  2  Pet.  .543;  Shelburne  Falls 
Nat.  Bank  v.  Townsley,  102  Mass.  177. 

54  Rand  V.  Reynolds,  2  Gratt.  171;  Follain  v.  Dupre,  11  Rob.  (La.) 
454. 

55Beckwith  v.  Smith,  22  Me.  12.5. 

80  Walter  v.  Haynes,  Ryan  &  M.  14!). 

57  True  V.  Collins,  3  Allen,  440;  Morse  v.  Chamberlain,  144  Mass.  408. 


§§  378,  oli).  AOTICK    Oi     J^I.siiO-Nui:.  .loi 

sons  with  the  same  surname  may  bo,  and  frequently  are, 
found  in  the  same  town.  If  one  has  a  fixed  residence,  the 
law  presumes  that  it  continues,  and  notice  sent  to  the  old 
address  vnW  be  sufficient,  unless  the  removal  was  under  cir- 
cumstancpi^  of  peculiar  notoriety. 

§  378.  Time  within  which  notice  may  or  must  be  ^ven. — 
Eeferring  t(j  the  time  of  the  (hiy  of  tlie  dishonor  at  which 
the  holder  may  give  notice,  it  is  well  settled  that  as  soon 
as  the  demand  is  made,  and  the  dishonor  has  occurred,  the 
holder  need  not  wait  until  the  close  of  business  hours  to 
send  notice."'^**  Mr.  Chitty  says:  "  It  seems  clear  that  notice 
of  nonpayment  may  be  given  on  the  last  day  of  grace,  when- 
ever, after  due  presentment  and  demand,  the  drawee  makes 
an  unqualified  refusal  to  pay  at  all."  ^^  But  it  is  clear  that 
the  holder  is  not  obliged  to  give  notice  immediately  on  the 
very  day  of  the  dishonor,  although  he  has  the  option  so  to 
do.*^"  The  settled  rule  is  that  the  holder  has  until  the  ex- 
piration of  the  following  day  to  give  notice;  and  he  is  not 
confined  ^^ithin  the  business  hours  of  the  day  to  give  the 
notice  at  the  party's  dwelling.^^  lie  may  give  it  there  at 
any  time  before  the  hours  of  rest;  l)ut  if  he  gives  it  at  the 
place  of  business,  it  must  be  done  during  the  hours  of  busi- 
ness. 

§  379.  When  the  parties  reside  in  different  places. —  If  the 
holder  and  the  party  or  parties  sought  to  Ik^  Ixniud  live  in 
different  places,  and  thei-e  is  mail  connuunication  between 
them,  the  rule  laid  down  by  the  United  States  Supreme 
Court  is,  that  the  notice  should  be  deposited  in  the  post 
in  time  to  be  sent  by  the  mail  of  the  day  after  dishonor, 
provided  such  mail  is  not  closed  before  early  and  convenient 

58  Bank  of  Alexandria  v.  Swan,  9  Pet.  33;  Lenox  v.  Roberts,  2  Wheat. 
373;  Price  v.  Young,  1  McCord,  330. 

r.9  Chitty  on  Bills  [*482],  544. 

coDarbishire  v.  Parker,  6  East,  8:  Tindall  v.  Brown.  1  T.  R.  168; 
Phelps  V.  Stocking,  21  Nebr.  444. 

ci  Jameson  v.  Swinton.  2  Taunt.  224;  Bayley  on  Bills,  176. 

62  Parker  v.  Gordon,  7  East,  38.5;  Adams  v.  Wright.  14  Wis.  408; 
Cavuga  County  Bank  v.  Ihmt.  2  Hill.  630. 


252  PROTEST    AND    NOTICE    OF    DISIIONOK.  §  380. 

business  hours  of  that  day;  in  which  case  it  must  be  sent 
by  the  next  mail  thereafter. *^^ 

In  other  words,  tlie  notice  must  be  sent  by  the  first  mail 
which  leaves  after  the  day  of  dishonor  is  past,  and  does  not 
close  before  early  and  convenient  business  hours  of  the  day 
succeeding  the  day  of  dishonor;  the  design  of  the  law  being 
to  afford  the  holder  an  opportunity  to  mail  the  notice  on 
the  day  succeeding  that  of  dishonor. 

This  rule  is  sanctioned  by  numerous  and  eminent  au- 
thorities, either  expressly  or  by  implication,  and,  it  seems 
to  us,  adopts  the  only  principle  which  may  be  safely  fol- 
lowed in  all  cases.*^ 

What  hour  of  the  next  day  after  dishonor  may  be  con- 
sidered as  reasonably  early  and  convenient  within  the  mean- 
ing of  this  rule  must  depend  upon  the  habits  of  the  busi- 
ness community  in  each  place,  and  no  precise  hour  can  be 
arbitrarily  named.  If  the  mail  closes  before  early  business 
hours  of  the  day  after  dishonor,  whether  it  be  during  the 
night  before,  or  at  three,  four,  five,  or  six  o'clock  a.  :m. 
thereof,  the  notice  need  not,  under  the  nile,  be  sent 
thereby.^^  Seven  o'clock  seems  debatable,*'*''  at  least  the  hour 
is  not  clearly  A\'ithin  early  business  hours,  unless  at  some 
particular  localities,   and  sunrise   is  certainly  too   soon.^^ 

^  380.  Each  holder  has  a  day  to  ^ve  notice  to  his  prede- 
cessor on  the  paper — The  party  receiving  the  notice  may  de- 
sire to  communicate  it  to  parties  antecedent  to  him,  and 
others  before  him  likcAx-ise  to  transmit  it  to  those  ante- 
cedent to  thorn.     In  sucli  cases  the  general  rule  also  is,  that 

63  United  States  v.  Barker,  12  Wheat.  .1.19;  Fiillerton  v.  Bank  of 
the  United  States,  1  Pet.  G05. 

64  Farmers'  Bank  v.  Diivall,  7  Gill  &  J.  78 ;  Burgess  v.  Vreeland,  4 
N.  J.  71;  Chi.'k  v.  Pillsbuiy,  24  Me.  4.")8;  Eagle  Bank  v.  Chapin,  3  Pick. 
180. 

65Geill  V.  Jeremy.  1  Moody  &  M.  01;  Mitchell  v.  Cross.  2  R.  1.  437; 
Wemple  v.  Dangerfield,  2  Smedes  &  M.  445;  West  v.  Brown,  G  Oliio  St. 
542;  Chick  v.  Pillsbiiry,  24  Me.  458. 

06  Stephenson  v.  Dickson,  24  Pa.  St.  148;  Commercial  Bank  v.  King, 
3  Rob.  (La.)  243. 

6"Deminds  v.  Kirkman,  1    Smedes  &  ]\I.  644. 


§  381.  NOTICK    OF    I)IS110.\(^I£.  25.'j 

each  successive  party  who  receives  notice  of  dishonor  is 
entitled  to  a  full  day  to  transmit  it  to  any  antecedent  party 
who  is  chargeable  over  to  him  upon  payment  of  the  bill  or 
note.*^  So  that,  if  a  party  receives  notice  on  one  day,  he  is 
not  bound  to  forward  it  to  a  prior  indorser  until  the  next 
day,  and  not  then  if  the  mail  leaves  before  early  business 
hours.  A  different  rule  would  subject  every  party  to  the 
inconvenience  of  givinc;  an  account  of  all  of  his  other  en- 
gagomonts,  in  order  to  prove  that  he  could  not  reasonably 
be  expected  to  send  notice  by  the  same  day's  post  which 
brought  it.*'® 

Upon  receiving  notice  of  dishonor,  the  indorser  should  — 
if  there  be  prior  parties  whom  he  wishes  to  hold  liable  — 
immediately  notify  not  only  the  one  immediately  antecedent 
to  him,  but  all  of  them;  for  otherwise,  by  the  negligence 
of  his  previous  indorser,  or  of  some  one  of  the  successive 
indorsers,  he  may  lose  recourse  against  some  or  all  of  them 
but  the  one  notified  by  him.'^^ 

§  381.  Transmission  of  notice  over  seas. —  In  the  case  of  a 
foreign  bill  protested  in  one  of  the  United  States,  and  the 
party  entitled  to  notice  resides  in  some  other  nationality 
beyond  seas,  it  is  sufficient  to  send  notice  by  the  first  regu- 
lar ship;  and  it  is  no  objection  that  if  sent  by  a  chance 
ship  it  would  reach  him  sooner."  It  should  be  sent  by  the 
ship  going  to  the  port  at  which  the  party  resides,  or  to 
some  neighboring  or  convenient  port  according  to  the  usual 
course  of  transportation  of  letters  of  business,  if  a  reason- 
able time  before  its  departure  is  left  for  writing  and  for- 
warding the  notice.'^  Other'\\nse,  it  yxiW  be  too  late,  unless 
the  delay  be  excused  by  circumstances.^^ 

68  Jameson  v.  Swinton,  2  Taunt.  224;  Lawson  v.  Farmers'  Bank,  1 
Ohio  St.  206;  Seaton  v.  Scovill,  18  Kan.  435. 

69  Bray  v.  Hadwen.  5  Maule  &  S.  68. 

70  Daniel  on  Nejrotiable  Instruments.  §  1044. 

71  Muilman  v.  D'Ejruino.  2  II.  Bl.  oOr,;  Darbishire  v.  Parker.  0  East.  3; 
Byles  on  Bills  [*2721.  421. 

72  Story  on  Bills.  §  2Sr. :  1  Parsons  on  Notes  and  Bills.  48o.  note. 
73  Leno.\  V.  Leverett,  10  Mass.  1. 


CHAPTER  XIII. 

CIRCUnSTANCES  OF  A  GENERAL  OR  SPECIAL  NATURE 
WHICH  EXCUSE  WANT  OF  PRESENTMENT,  PROTEST, 
OR  NOTICE  OF  DISHONOR. 


SECTION  I. 

CIRCUMSTANCES  OF  A  GENEEAL  NATURE  WHICH  EXCUSE  WANT 
OF  PRESENTMENT,   PROTEST,  OR  NOTICE   OF  DISHONOR. 

§  382.  Classification. —  The  circumstances  of  a  general 
nature  whicli  excuse  the  holder  when  there  has  been  a  failure 
on  his  part  to  make  due  presentment  of  the  bill  or  note 
to  the  drawee,  acceptor,  or  maker,  or  to  convey  due  notice 
of  dishonor  to  the  drawer  or  indorser,  may  be  classified  as 
follows : 

(1)  The  breaking  out  of  a  war  between  the  country  of 
the  holder  and  that  of  the  party  to  whom  presentment 
should  be  made  or  notice  given. 

(2)  Public  and  positive  prohibitions  of  commercial  inter- 
course between  the  countries  of  the  holder  and  that  of 
the  party  to  whom  presentment  should  be  made  or  notice 
given. 

(3)  The  occupation  of  the  country  where  the  parties  live, 
or  where  th(^  l)ill  or  note  is  payable,  by  a  public  enemy,  or 
by  military  forces,  which  obstructs  or  suspends  commercial 
intercourse. 

(4)  Political  disturbances  amounting  to  a  virtual  inter- 
ruption and  obstruction  of  the  ordinary  negotiations  of  trade. 

(5)  The  prevalence  of  a  malignant  epidemic  disease,  which 
suspends  the  ordinary  operations  of  business. 

(6)  Overwhelming  calamity,  or  unavoidable  accident, 
which  obstructs  the  usual  channels  of  communication. 

These  circumstances  are  of  a  character  not  affecting  the 
individual  peculiarly,  but  having  such  a  general  influence 
upon  the  country  or  the  community  as  to  impede  and  pre- 

[254] 


§§  383,  384.        (IRCTMSTAXCKS   OF    A   GENEKAL   NATURE.        255 

vent  the  ordinary  i)iirsnits  of  business,  or  obstruct  the 
methods  of  communication,  and  they  are  recognized,  almost, 
if  not  ([uite,  universally,  as  exonerating  those  who  como 
under  their  operation  from  the  performance  of  the  obliga- 
tions in  respect  to  negotiable  instruments  with  which  they 
interfere. 

§  383.  When  impediment  ceases,  duty  to  make  demand  or 
gfive  notice  revives. —  These  excuses  —  war,  military  or  ])oliti- 
cal  disturbance,  interdiction  of  commerce,  prevalence  of  dis- 
ease, overwhelming  accidents,  ct  cetera  —  do  not  justify  a 
total  dispensation  of  demand  and  notice,  but  only  excuse 
the  delay  which  these  circumstances  may  occasion.  As  soon 
as  the  impediment  ceases,  the  duty  revives;  and  if  demand 
and  notice  be  not  speedily  made,  the  holder  is  in  default, 
and  drawers  and  indorsers  are  discharged.^  Thus,  where 
the  holder  of  a  bill  in  Xew  York  delayed,  for  several  months 
after  restoration  of  commercial  intercourse  between  Xew 
York  and  Xew  Orleans  (the  former  being  in  the  T^nitcd 
States,  and  the  latter  in  the  Confederate  States  during  the 
war  of  secession),  to  present  the  bill  to  the  acceptor  in  Xew 
Orleans  for  payment,  it  was  held  that  the  drawer  was  dis- 
charged.^ Tn  Maryland,  it  was  said  by  Stewart,  J. :  "  There 
must  be  the  earliest  possible  presentment  when  impediment 
ceased."  ^ 

§  384.  War,  public  interdiction  of  commerce,  military  dis- 
turbances, etc. —  A  declaration  of  war  betw^een  the  country 
where  the  holder  is  domiciled  and  that  where  the  party 
to  whom  presentment  should  be  made  or  notice  given  is 
domiciled,  or  the  breaking  out  of  hostilities  between  such 
countries,  operates  as  an  interdiction  of  all  commercial  inter- 
course; and  all  communication  between  the  subjects  of  the 
belligerents,  or  parties  on  opposite  sides  of  the  belligerent 
line,  is  prohibited.  This  is  a  general  principle  of  the  law 
of  nations,  recognized  and  applied  to  all  kinds  of  transac- 

1  House  V.  Adams,  48  Pa.  St.  2G6;  Farmers'  Bank  v.  Gunnell,  26  Gratt. 
132:  -Tames  v.  Wade.  21  La.  Ann.  548. 

2  Durdon  v.  Smith,  44  ^liss.  552. 
•■JXorris  v.  Despavd.  .38  'SUl.  401. 


250  EXCUSES    FOR    XOXPKESE^•TME^'T,    ETC.  §  385. 

tions;  and  it  constitutes  a  clear  and  admitted  justification, 
of  the  omission  to  make  due  presentment  of  the  bill  or  note 
or  to  give  notice,  during  the  continuance  of  hostilities  or 
the  suspension  and  prohibition  of  intercourse.'*  Illustrative 
of  the  proposition  stated,  interesting  cases  have  arisen  grow- 
ing out  of  the  war  between  the  States,  some  authorities  ad- 
hering to  the  view  that  as  commercial  intercourse  between 
the  United  States  and  the  secession  States  was  not  inter- 
dicted until  August  16,  1861,  by  proclamation  of  President 
Lincoln,  contracts  between  persons  in  the  Union  and  the 
seceded  States  were  not  until  that  time  illegal;^  others  hold- 
ing that  the  test  is  the  existence  or  nonexistence  of  an  actual 
state  of  war,  and  that  no  express  prohibition  is  necessary  to 
determine  that  fact.^ 

The  interdiction  of  intercourse  between  the  countries  of 
the  holder  and  of  the  party  to  whom  presentment  should  be 
made  would  excuse  the  holder  for  nonpresentment  and  notice 
as  effectually  as  a  declaration  or  open  state  of  war.'^  It  like- 
wise follows  that  where  the  occupation  of  the  country  by 
the  public  enemy  is  of  such  a  character  as  to  sever  the  parties 
from  each  other  by  a  hostile  line,  the  same  principle  applies 
as  if  they  were  in  fact  domiciled  in  different  countries  at 
war  vnth  each  other.^ 

^  385.  Political  disturbances,  epidemics,  overwhelming 
ccilamities,  etc. —  "WHien  political  disturbances  virtually  inter- 
rupt and  obstruct  the  ordinary  negotiations  of  trade,  they 
constitute  a  sufficient  excuse  for  want  of  presentment  or 
notice,  upon  the  same  principle  that  controls  in  cases  of 
military   operations    or  interdictions   of   commerce.^ 

4  Harden  v.  ]5oyce,  59  Barb.  427;  House  v.  Adams,  48  Pa.  St.  261; 
Xorris  v.  Despard,  .38  Md.  491. 

5  Leathers  v.  Conneeticut  Ins.  Co.,  2  Bush,  29G;  Union  Nat.  Bank  v. 
Marr's  Adinr.,  f.  Bush,  61,5. 

6  Bilberry  v.  Branch.  19  Gratt.  .39.3;  McVeif^h  v.  Bank  of  Old  Dominion, 
26  Gratt.  785.     See  Griswold  v.  Waddington,  19  Johns.  438. 

7  Story  on  Notes,  §§  257,  263;  1  Parsons  on  Notes  and  Bills,  461. 
sPolkv.  Spinks.  5  Coldw.  431;  Blair  &  Hoge  v.  Wilson,  28  Gratt.  1<2; 

Tardy  v.  Boyd.  26  Gratt.  6.32. 

8  Story  on  Notes,  §  261;  Blair  &  Hoge  v.  Wilson,  28  Gratt.  172. 


§386.  CIKCUMSTANCES    OF    A    SPECIAL    NATURE.  25 1 

The  prevalence  of  a  malignant,  contagious,  or  infectious 
disease,  such  as  the  cholera,  yellow  fever,  the  plague,  or 
small-pox,  which  has  become  so  extensive  as  to  suspend  all 
commercial  business  and  intercourse,  or  to  render  it  very 
hazardous  to  enter  into  the  infected  district,  is  recognized 
by  the  text-writers  as  a  sufficient  excuse  for  not  doing  any 
act  which  would  require  an  entry  into  3uch  district.^*^  And 
every  consideration  of  public  policy  and  of  biunanity  must 
sanction  this  rule. 

The  existence  of  an  overwhelming  calamity  or  inevitable 
accident,  which  suddenly  intervene,  without  any  default  on 
the  holder's  part,  and  which  render  it  impossible  or  imprac- 
ticable to  make  due  presentment  or  to  give  due  notice,  will 
excuse  the  holder  for  his  failure  in  regard  to  presentment 
and  notice.  Among  the  circumstances  of  this  class  may 
be  enumerated  freshets  which  carry  away  bridges  and  de- 
stroy the  means  of  communication;  violent  snow  storms 
which  render  the  roads  impassable;  tornadoes  and  earth- 
quakes wdiich  paralyze  all  affairs  for  the  time  being,  or  ren- 
der intercourse  impracticable." 

SECTION  TT. 

CIRCUMSTANCES  OF  A  SPECIAL  NATURE  WHICH  EITHER  EXCUSE 
WANT  OF,  OR  SHOW  ABSENCE  OF  A  RIGHT  TO  REQUIRE,  TRE- 
SENT:MENT,    PROTEST,    OR    NOTICE    OF    DISHONOR. 

§  386.  Classification Besides  the  circumstances  of  a  gen- 
eral nature  which  excuse  delay  or  absence  of  presentment, 
protest,  or  notice,  there  are  some  of  a  special  nature  wdiich 
have  the  like  effect.  These  s])ecial  circumstances  may  be 
classified  as  follows:  I.  Circumstances  showing  an  original 
al)sence  of  right  to  require  these  steps  to  be  taken.  TI. 
Circumstances  arising  from  special  acts  of  waiver.  III. 
Circumstances  which  show  an  inability  on  the  part  of  the 

10  1  Pardons  on  Notes  and  Bills,  400.  r)31 ;  Edwards  on  Bills.  402; 
Story  on  Bills,  §  308. 

11  Windham  Bank  v.  Norton.  22  .Conn.  213:  Hilton  v.  Shepherd.  0 
East,  16;  Chitty  on  Bills  [*451],  oOO;  Story  on  Bills,  §§  283,  2SG,  .308, 
327,  365. 

17 


258  EXCUSES    FOR    NONPRESENTMENT,    ETC.  §  387. 

luiklcr  to  make  duo  presciitinent  or  protest,  or  give  notice. 
IV.  Special  circumstances  arising  from  the  conduct  of  the 
party.  Y.  Special  waivers  by  promises  to  pay  and  part  pay- 
ments after  maturity.  These  circiunstances,  thus  classified, 
will  be  now  separately  considered. 

§  387.  Circumstances  which  show  absence  of  right  to  require. 
—  When  the  drawer  has  drawn  the  bill  without  the  right 
to  do  so,  or  without  any  reasonable  ground  to  expect  that 
the  drawee  would  honor  it,  the  omission  of  the  holder  to 
make  a  due  presentment  of  it  for  acceptance  or  payment 
(no  acceptance  intervening),  or  to  give  the  drawer  due  notice 
of  its  dishonor  by  the  drawee,  mil  be  excused.^"  This  doc- 
trine rests  upon  the  ground  that  the  drawer  has  conmiitted 
fraud  or  folly  in  undertaking  that  the  drawee  would  honor 
his  bill,  when  he  had  no  right  or  reasonable  ground  to  ex- 
pect it;  and  that  he  can  suffer  no  loss  or  injury  from  the 
failure  of  the  holder  to  make  a  presentment  to  the  drawee, 
which  would  naturally  be  fruitless,  or  to  give  him,  the 
drawer,  notice  of  a  dishonor  which  he  must  have  known  by 
anticipation.  And  if  the  drawer  has  no  funds  in  the  drawee's 
hands  with  which  to  meet  the  bill,  and  the  drawee  has  not 
in  any  way  or  to  any  extent  obligated  himself  to  accept  it, 
the  drawer  has  no  right  to  expect  or  require  formal  present- 
ment of  the  bill  for  acceptance.^^  And  if  the  bill  has  been 
accepted  for  the  mere  accommodation  of  the  drawer,  and  he 
has  undertaken  to  supply  funds  to  meet  it,  a  failure  to  pre- 
sent it  to  the  acceptor  will  be  excused  as  against  the  drawer, 
who  could  not  suffer  save  from  his  owii  laches.^^ 

If  the  drawer  withdraws  the  funds  which  he  had  in  the 
drawee's  hands  when  he  drew  the  bill,  or  intercepts  funds 
which  he  had  provided  to  meet  the  bill;  or  if  he  privately 
directs  the  drawer  not  to  honor  it,  or  otherwise  prevents 
the  due  acceptance  or  payment  of  his  draft,  he  commits  a 

laChitty  on  Bills  [*436],  490;  Story  on  Bills,  §§  280,  375. 

13  Beckerdike  v.  Bollman,  1  T.  R.  405;  Donncll  v.  Savings  Bank,  80  Mo. 
172;   Compton  v.  Blair,  46  Mich.  1.  . 

14  French  v.  Bank  of  Columbia,  4  Cranch,  141;  Torrey  v.  Foss,  40  Me. 
74 ;  Ross  v.  Bedell,  5  Duer,  462. 


§  388.     CIRCUMSTANCES  OF  A  SPECIAL  NATURE.       2.50 

fraud  upon  tho  holrlor  of  tlio  ])ill,  ;ui<l  forfeits  liis  right  to 
require  demand  and  notice.'"'' 

But  the  bona  fide  expectation  of  the  drawer  based  upon 
his  relations  with  tlie  drawee,  and  the  provision  he  has  made, 
or  intends  to  make,  and  does  make,  are  the  eireumstances  to 
be  regarded.  If  he  has  no  funds  in  the  drawee's  hands  when 
he  draws,  and  yet  provides  them  before  presentment,  ho 
shonhl  have  notice.^*'  If  the  drawer  has  any  arrangement 
by  which,  at  the  time  the  bill  is  presented,  he  has  a  right 
to  expect  it  to  be  honored  (i.  e.,  running  open  account  with 
draweo,  with  insufficient  balance  to  his  credit),  we  should 
say  he  should  have  demand  and  notice,''^  for  it  would  be 
presumed  that  such  arrangement  was  contemplated  when 
he  drew. 

§388.  Waiver;  general  principles. —  AVhen  presentment  of 
the  bill  or  note  at  maturity  has  been  dispensed  with  by  prior 
agreement  between  the  parties,  or,  in  other  words,  has  been 
waived  by  the  party  entitled  to  require  it,  the  holder  is  ex- 
cused for  his  failure  to  make  it.  It  would  be  a  fraud  upon 
the  holder  to  pennit  him  to  suffer  by  acting  upon  the  as- 
surance of  the  party  to  whom  he  looks  as  security  upon  the 
paper;  and  as  prompt  presentment  is  a  requirement  solely 
for  the  benefit  of  the  drawer  and  indorser,  they  are  them- 
selves the  sole  judges  to  determine  whether  or  not  they  will 
enforce  it.  The  waiver  may  be  either  verbally  or  in  writing; 
it  may  be  expressed  in  totidcm  verbis,  or  inferred  from  the 
words  or  acts  of  the  party;  and  it  matters  not  what  particu- 
lar language  may  be  used,  so  that  it  conveys  the  idea  that 
tho  presentment  at  maturity  is  dispensed  with.  The  like 
observations  apply  to  the  protest  and  notice.  Where  the 
indorser  of  a  check  wrote  over  his  name,  ''  waiving  demand 
and  notice,"   it  was  held   that   he   was  not   entitled   to   re- 

15  Dickens  v.  Beal,  10  Pet.  572:  Rhett  v.  Poe,  2  How.  457;  Valk  v. 
Simmons,  4  Mason,  113;   SutclifTe  v.  McDowell,  2  Nott  &  McC.  251. 

16  Robins  V.  Cibson,  3  Cam])b.  :?:U ;  Hammond  v.  Dufresno.  3  Campb. 
145;  Orear  v.  McDonald.  9  Gill,  350. 

iTThackray  v.  Blackett,  3  Campb.  164;  Legge  v.  Thorpe,  12  East,  171;, 
1  Parsons  on  Notes  and  Bills.  548. 


260  EXCUSES    FOR    NONTKESENTMENT,    ETC.  §  389. 

quire  any  demand  of  the  maker,  or  notice  to  himself  of  iion- 
pajTnent,  as  conditions  precedent  to  his  liability.  Such 
words  have  the  effect  of  dispensing  with  the  necessity  for 
those  formalities.^* 

§  389.  Character  and  effect  of  waiver. —  Tlie  waiver  may 
Lo  express  or  im])lie(l.  It  may  result,  therefore,  that  the 
waiver  may  be  either  direct  and  positive,  or  may  arise  from 
implication  and  visage,  or  from  any  understanding  between 
the  parties  which  is  of  a  character  to  satisfy  the  mind  that 
a  waiver  is  intended;^'"*  but  there  is  authority  to  the  effect 
that  such  waivers  as  we  are  now  treating  of  should  receive  a 
strict  construction.  And  it  has  been  said  that  to  show  a 
waiver  of  demand  and  notice  there  must  be  clear  and  un- 
equivocal evidence,  and  that  equivocal  circumstances  or 
agreements  will  not  sufiice.^°  And  it  is  well  settled  that  a 
promise  to  pay  after  maturity,  or  an  acknowledgment  of 
continued  liability,  with  knowledge  that  the  usual  steps  of 
demand,  protest,  and  notice  were  not  duly  taken,  constitutes 
an  implied  waiver,  and  the  liability  of  the  drawer  or  in- 
dorser  is  absolutely  fixed  thereby;  and  part  payment  after 
maturity  by  the  drawer  or  indorser  is  presumptive  evidence 
that  the  party  was  dul}'  charged  by  demand  and  notice. 

The  waiver  may  be  either  written  or  verbal,  and  it  is  con- 
ceded on  all  sides  that  a  verbal  waiver  is  as  effectual  as  a 
written  one;  and  the  weight  of  authority  sustains  the  propo- 
sition that  a  parol  promise  to  pay  the  note  absolutely,  made 
by  the  indorser  at  the  time  he  indorses  it,  or  a  promise  to 
pay  it  if  the  maker  does  not,  or  a  verbal  agreement  between 
the  ]iarties  that  payment  should  not  be  demanded  until 
after  maturity,  is  admissible  to  prove  a  waiver  of  demand 
and  notice.  Such  evidence  is  not  offered  for  the  purpose 
of  varying  the  written  contract  of  indorsement,  which  is 

18  Daniel  on  Negotiable  Instruments,  §  1090;  Emery  v.  Hobsen,  62 
Me.  578;  Woodman  v.  Thurston,  8  Cush.  157. 

19  Fuller  V.  McDonald,  8  Greenl.  213;  1  Parsons  on  Notes  and  Bills, 
594. 

20 Bird  V.  Le  Blanc,  0  La.  Ann.  470;  Gregory  v.  Allen,  Mart.  &  Y,  74; 
Story  on  Bills,  §  371. 


§  3U0,  CIKCUMSTAXCKS    OF    A    SI'ECIAT.    NATUUE.  ,2G1 

simply  to  pay  the  note  after  exercise  of  due  diligence  against 
tlio  maker,  but  to  sIkjw  that  the  parties  have  between  them- 
selves settled  the  ainount  <»f  diligence  to  be  re<piired.''  It 
has  been  held  dilicrently,"  but  the  doctrine  of  the  text 
seems  to  us  more  consistent  with  the  principles  upon  which 
waivers  are  sustained. 

It  nuiy  be,  if  written,  either  upon  the  instnmient  itself, 
or  upon  a  separate  ])aper,  written  prior  to,  contemporane- 
ously with,  or  subsequent  to  the  indorsement.^'  And  the 
tei-ms  of  the  waiver  may  be  either  narrow  or  broad  —  either 
to  include  all  the  steps  usually  necessary  to  i3x  the  liability 
of  the  indorser,  or  any  one  or  more  of  them ;  and  while  the 
tendency  of  the  courts  is  to  construe  a  waiver  as  including 
all  of  the  steps  necessary  to  fix  liability,  yet  a  waiver  is  not 
to  be  construed  to  extend  beyond  the  fair  and  reasonable 
import  of  its  terms.  Therefore,  a  waiver  of  notice,  which 
is  a  separate  and  distinct  step  from  the  presentment,  is  not 
regarded  as  waiving  the  presentment  or  demand  upon  the 
drawee  or  maker.  The  draw^er  or  indorser  may  have  had 
confidence  that  the  drawee,  acceptor,  or  maker  would  honor 
the  bill  or  note  upon  its  presentment;  or  the  holder  may 
have  insisted  on  not  incurring  the  risk  of  diligence  required 
in  giving  prompt  notice.^"* 

§  390.  Circumstances  which  show  inability  on  part  of  holder 
to  make  due  presentment  or  protest,  or  g^ve  notice;  when  no 
one  in  existence  upon  whom  to  make  demand. —  Where  there 
is  no  [)erson  in  existence  upon  whom  demand  can  be  made, 
or  none  who  is  legally  liable,  the  presentment  is  excused, 
for  the  reason  that  it  is  either  an  impossibility  or  that  it 
would  be  a  fraud  upon  the  holder  to  require  it.     Thus  where 

21  Sigerson  v.  Mathews,  20  How.  496;  Yeager  v.  Falwell,  13  Wall.  12; 
Ross  V.  Hiird.  71  N.  Y.  14;  Armstronj?  v.  Chadwick,  127  Mass.  156;  Dye 
V.  Scott,  3.5  Ohio  St.  104;  Annville  Nat.  Bank  v.  Kettering.  106  Ta.  St. 
531  ;  Boyd  v.  Cleveland,  4  Pick.  525. 

22  Booler  v.  Frost,  70  :Mo.  ISO;  Barry  v.  Morse,  3  X.  II.  132. 

2.-?  Daniel  on  Negotiable  Instruments,  §§  10926,  1093;  Duvall  v.  Farm- 
ers' Bank,  7  Gill  &  J.  44;  Spencer  v.  Harvey,  17  Wend.  4S9. 

24  Daniel  on  Negotiable  Instruments,  §  1096;  Backus  v.  Sheplicrd.  11 
Wend.  629;  Voorhecs  v.  Atlee,  29  Iowa,  49. 


262  EXCUSES    FOR    XONPRESEJTTMENT,    ETC.  §  391. 

the  maker  has  died  before  maturity,  and  there  is  no  per- 
sonal representative  of  whom  payment  could  be  demanded, 
it  cannot  of  course  be  made;  but  it  would  be  othei-Avise  if 
a  personal  representative  had  been  appointed.^^  And  so  in 
all  cases,  where  there  is  an  actual  party  bound  as  promisor, 
but  no  one  then  existing  who  represents  him,  the  delay  in 
making  demand  is  excused.  But  it  is  no  excuse  for  want  of 
notice  to  the  drawer  or  indorser.^^ 

§391.  When  note  is  void,  and  indorser  knows  it. —  Where 
the  note  is  void,  as  between  tlie  maker  and  payee,  on  account 
of  an  illegal  consideration,  the  indorser  may  be  held  with- 
out any  proof  of  demand  or  notice;  and  the  general  prin- 
ciple is,  that  whenever  the  principal  party  is  not  bound,  the 
indorser  is  bound  \\^thout  demand  or  notice.^  The  payee, 
Avhen  he  indorses  the  note,  warrants,  by  the  very  act  of  in- 
dorsement, that  the  maker  is  legally  liable  to  pay  it,  know- 
ing, as  he  necessarily  must,  that  such  is  not  the  case.  The 
holder,  in  the  belief  of  its  truth,  might  look  only  to  the 
maker,  and  fail  to  take  the  usual  steps  to  charge  the  in- 
dorser; and  if,  when  he  became  aware  that  the  maker  was 
not  legally  bound,  he  could  not  recover  against  the  indorser, 
the  latter  would  be  protected  by  his  o^vn  fraud,  and  the 
holder  suffer  by  the  confidence  placed  in  him.  Thus,  in 
Massachusetts,  where  a  note  was  void  for  usury  between 
maker  and  payee,  and  the  holder  failed  in  suit  against  the 
maker  on  that  account,  it  was  held  that  he  could  hold  the 
indorser  without  any  proof  of  demand  or  notice.^*  Knowl- 
edge of  the  infirmity  rendering  the  instrument  void,  on  the 
part  of  the  indorser,  is  considered  by  high  authorities  es- 
sential to  charge  them  without  demand  or  notice  —  the 
transaction  amounting  in  such  case  to  a  fraud.  The  de- 
cisions on  this  subject,  however,  are  not  uniform.^ 

25Chitty  on  Bills  [*436,  437]  ;  1  Parsons  on  Notes  and  Bills,  444,  445. 
20  Price  v.  Younjr,  1  McCord,  339. 

2VBayley  on  Bills,  205;   1  Parsons  on  Notes  and  Bills,  444,  445;  Per- 
kins V.  White,  Ohio  S.  C,  January,  1881. 
28Copp  V.  McDugall,  9  Mass.  1. 
20  Daniel  on  Negotiable  Instruments,  §§  1113f/,  ]U2h. 


§  392.  CIRCUMSTANCES    OF    A    SPKCIAL    XATUUP:.  263 

The  principles  herein  announced  with  reference  to  in- 
dorsers  are  equally  ai)plicable  to  drawers  of  bills  of  ex- 
chanti'e. 

§  392.  Impracticability  of  finding  party. —  'Ilie  want  of 
due  presentment,  or  due  notice,  mil  be  excused  when  the 
holder,  after  exercising  due  diligence,  cannot  find  the  party 
to  whom  presentment  should  be  made  or  notice  given,  or 
ascertain  his  place  of  residence  or  business.  When  this 
excuse  is  relied  upon,  it  becomes  often  a  question  of  nicety 
to  determine  whether  or  not  the  steps  taken  by  the  holder 
to  find  the  party  to  whom  presentment  should  be  made  or 
notice  given,  or  to  ascertain  his  place  of  residence  or  busi- 
ness, amounted  to  the  due  diligence  which  the  law  exacts, 
and  it  is  therefore  important  to  define  in  what  such,  diligence 
consists.^''  The  burden  of  proving  due  diligence  ^vill  be 
upon  him  who  is  seeking  to  avail  himself  of  that  excuse.^^ 
Due  diligence  in  making  presentment  for  payment,  and  in 
communicating  notice,  consists,  as  a  general  rule,  in  mak- 
ing inquiries  of  sucli  accessible  persons,  as  from  their  con- 
nection with  the  transaction  or  place,  or  parties,  are  likely 
to  be  informed  and  in  acting  in  accordance  vnth  the  in- 
formation derived  from  them.^"  The  holder  is  not  bound 
to  inquire  further  than  a  reasonable  and  prudent  man  should, 
and  every  possible  exertion  is  not  exacted  of  him.  In  the 
langiiage  of  the  Supreme  Court  of  the  United  States,  "  It  is 
enough  to  send  the  notice  to  tlie  ]ilaec  where  the  iiiforma- 
tion  received  reasonably  requires  him  to  send  it.  If  the 
place  it  reaches  is  the  wrong  one,  it  is  not  his  (the  holder's) 
fault."  ^^  It  has  been  held  that  due  diligence  would  neces- 
sitate an  inquiry  by  the  holder  of  the  indorser  or  other 
party  to  the  instniment,  to  ascertain  the  whereabouts  of 
the  acceptor  or  maker.^'* 

30  story  on  Bills,  §  351. 

31  Martin  v.  Grabinsky.  38  Mo.  App.  359. 

32  Lambert  v.  Ghiselin,  0  How.  452;  Chapman  v.  Lipscombe,  1  Johns. 
294. 

33  Harris  v.  Robinson.  4  How.  330. 

34Whpolcr  V.  Field,  0  :Mctc.  (Mass.)  200:  Orafton  Bank  v.  Cox.  13 
Gray,  505. 


lH)4  EXCUSES     FOR    ^•0^■pRESENTMENT,     ETC.  §  393. 

§393.  When  place  of  business,  or  payment,  closed;  party 
absent  from  home,  etc. —  If  the  doors  of  the  business  office  of 
the  acceptor  or  maker  are  closed,  and  there  be  no  one  there 
to  answer  the  demand  after  repeated  calls,  it  has  been  held 
by  high  authority  that  the  bill  or  note  may  be  protested 
without  making  further  inquiries;  for  he  is  bound  to  have 
a  suitable  person  there  to  answer  inquiries  and  pay  his  bills 
and  notes,  if  there  demanded.^^  Or  if  the  holder,  on  the 
day  of  maturity,  finds  the  bank  or  other  place  of  payment 
closed,  he  is  not  bound  to  make  any  further  demand  to 
charge  either  drawer  or  indorser.^"  If  the  paper  is  payable 
at  a  certain  bank  that  has  ceased  to  exist,  or  at  the  counting- 
room  of  a  firm  which  has  dissolved  before  its  maturity,  it 
will  certainly  be  sufficient  to  make  presentment  to  the  bank 
which  has  succeeded  the  former  institution,  if  such  there 
be,  or  at  the  counting-room  of  the  succeeding  firm,  if  such 
there  be.^^ 

If  the  party  to  be  notified  is  traveling,  or  is  absent  from 
home  for  any  reason,  and  his  present  address  is  known  to 
the  holder,  or  if  his  absence  from  home  is  known,  and  the 
holder  has  any  means  of  learning  his  address,  or  of  ascer- 
taining whom  he  has  left  behind  to  attend  to  his  business, 
it  would  probably  be  his  duty  to  send  notice  accordingly. 
But  if  a  party  leaves  home  without  taking  the  usual  and 
proper  precautions  to  facilitate  sending  business  communi- 
cations to  him,  undoubtedly  this  is  his  fault,  and  he  can  re- 
lieve himself  from  no  responsibility  by  such  fault,  and  will 
be  held  to  all  parties  as  if  duly  notified,  provided  due  dili- 
gence be  used.'^ 

Inability  to  find  the  maker  or  acceptor  does  not  excuse 
want  of  notice  to  drawer  or  indorser;  but  inability  to  find 


35  Sulzbachcr  v.  Bank  of  .Charleston,  86  Tenn.  201;  Baiimgarden  y. 
Reeves,  3.5  Pa.  St.  2.50;   1  Parsons  on  Notes  and  Bills,  4.57. 

30Hine  v.  Allely,  4  B.  &  Ad.  024:  Central  Bank  v.  Allen,  10  Me.  41; 
Derg  V.  Abbott,  83  Pa.  St.  1.58 ;  Faulkner  v.  Faulkner,  73  Mo.  336. 

37  Central  Bank  v.  Allen,  16  Me.  41;  Pvoberts  v.  Mason,  1  Ala.  373; 
Sanderson  v.  Oakey,  14  La.  373. 

38  Daniel  on  Negotiable  Instruments,  §  1122;  1  Parsons  on  Notes  and 
Bills,  493. 


§§  394,  305.      ciKcr.MSTANCKs  or  a  special  xatcjiu:.      205 

the  drawer  or  iiulor.-er,  i)r  asccrlaiii  his  whereabouts,  after 
exercising  clue  diligence,  does  excuse  want  of  notice, 
because  it  is  then  impossible.'''''  But  the  holder  must  con- 
tinue his  inquiries  from  day  to  day,  and  give  notice  as  soon 
as  he  does  ascertain  the  jiarty's  whereabouts  —  the  excuse 
being  coextensive  oidy  with  the  necessary  delay;  and  the 
im])edinient  being  only  temporary,  the  duty  revives  with  its 
cessation.^° 

§  394.  When  instniment  acquired  too  late  to  make  de- 
mand or  give  notice. —  Where  the  payee,  or  subse(|uent  in- 
dorsee, does  not  transfer  and  indorse  the  bill  or  note  until 
so  near  its  maturity  that  it  is  then  impracticable  on  account 
of  the  distance  from,  or  inaccessibility  to,  the  place  where 
the  maker  or  acceptor  has  his  place  of  business  or  residence, 
or  where  the  bill  or  note  is  ])ayable,  the  payee,  or  other  in- 
dorser  so  transferring  it,  will  be  presumed  to  have  waived 
the  taking  of  these  steps  which  they  must  have  known  were 
impossible.  This  excuse,  however,  will  only  avail  as  be- 
tween the  immediate  parties  who  have  transferred  and  re- 
ceived the  instrument  at  so  late  a  period;  for  as  to  the  pre- 
vious parties  who  transferred  it  long  enough  before  maturity 
to  leave  adequate  time  for  its  due  presentment,  they  have 
a  right  to  insist  on  the  strict  performance  of  their  obliga- 
tions by  those  who   are  subsequent  holders.^^ 

§  395.  Illness  or  death  of  holder. —  When  sudden  illness  or 
death  of,  or  accident  to,  the  holder  or  his  agent  prevent? 
the  presentment  of  the  bill  or  note  in  due  season,  or  the 
communication  of  notice,  the  delay  is  excused,  provided  that 
presentment  is  made  and  notice  given  as  prom]itly  after- 
ward as  the  circumstances  reasonably  permit.^"  This  doc- 
trine rests  upon  the  same  principle  as  that  which  excuses 
want  of  punctuality  when  overwhelming  calamities  or  acci- 

"W  1  Parsons  on  Notes  and  Bills.  .")27. 

4<»  Danipl  on  Nejrotiable  Instnimonts.  5  1120. 

•il  Daniel  on  Nesroliable  Instruments,  §  1124:  1  Parsons  on  Notes  and 
Bills.  4;i0:  Story  on  Pills.  §  .320). 

43  White  V.  Stoddard.  11  Gray.  258:  Avmar  v.  Beers.  7  Cow.  TOfi; 
Hilton  V.  Shepherd,  6  East,  16;  Story  on  Bills,  §  308. 


:2GG       EXCUSES   fob  xoxrKi:si:> tment,   etc.     §§  39G,  307. 

dents  of  a  general  nature  prevent.  The  sudden  illness  or 
death  of  his  agent  is  on  the  same  footing  with  that  of  the 
holder  himself.'*^  If  the  excuse  be  illness,  it  must  be  of 
such  a  character  as  to  prevent  due  presentment  and  notice 
by  the  exercise  of  due  diligence.*^ 

vj  396.  Special  circumstances  arising  from  the  conduct  of 
the  party;  when  party  has  received  funds  with  which  to  pay 
instrument. —  Tlie  receiving  bv  the  drawer  or  indorser  of 
money  from  the  acceptor,  maker,  or  other  party  for  whose 
benefit  the  bill  or  note  was  made,  for  the  avowed  purpose 
of  taking  uj>  the  bill  or  note  at  its  maturity,  dispenses  as 
to  such  drawer  or  indorser  with  the  necessity  of  a  present- 
ment to  the  acceptor  or  maker,  for  the  obvious  reason  that 
the  indorser  becomes  himself  the  person  who  should  meet 
it.  And  so,  receiHng  any  other  property,  ^\'ith  the  agree- 
ment that  he  shall  apply  its  proceeds  to  paying  the  bill  or 
note  at  its  maturity,  has  the  same  effect.^^  The  indorser 
in  such  cases  has  no  remedy  over  against  any  one.  His 
arrangement  mth  his  principal  substitutes  him  in  that 
principal's  place ;  and  it  would  be  a  fraud  for  him  to  throw 
back  upon  him  the  burden  which  he  had  assumed  when  pro- 
vided ^\ath  the  means  to  bear  it.^*^ 

In  harmony  with  the  principle  just  stated,  it  is  well  set- 
tled that  the  receiving  of  security  or  indemnity  by  the  in- 
dorser from  the  maker  or  other  party  for  whose  benefit 
the  bill  or  note  was  executed  Avill  bind  the  indorser  without 
demand  and  notice.  But  in  order  to  thus  hold  the  indorser, 
the  security  received  must  be  full,  or  comprise  all  the 
makei^'s  estate.'*'^ 

^-  397.  When  maker  or  acceptor  has  absconded  or  removed 
his  domicile. —  "Wlion  the  maker  or  acceptor  of  the  instrument 
lias  actually  absconded,  and  especially  when  be  is  notoriously 

43Dug^an  V.  King,  Rice,  239;  Pothicr  de  Change,  note  144;  Chitty 
on  Bi'ls  (1.3th  Am.  ed.),  ,509,  note  a;  Story  on  Bills,  §  309. 

44  Turner  v.  T^ach,  Hilaiy  Term,  1818;  Chitty  on  Bills  [*4.52],  509; 
1  Parsons  on  Notes  and  Bills,  .532. 

4.'5Ilay  V.  Smith,  17  Wall.  418;  Wright  v.  Andrews,  70  Me.  86;  Bond 
V.  Farnnam,  .5  Mass.  170. 

40  Daniel  on  Negotiable  Instruments,  §  1128. 

4"  Daniel  on  Negotiable  Instruments,  §§  1129,  1130. 


§  397.  CIRCUM.STAXC?:S    OF    A    SPECIAL    NATllU:.  2t17 

insolvent,  inquiries  are  unnecessarv.  Presentment  to  him 
personally  is  of  course  impossible,  and  presentment  at  his 
last  place  of  residence  or  business  is  altooether  unneces- 
sary. The  mere  fact  of  absconding  is  all  that  it  is  neces- 
sary for  the  holder  to  show.  Thi>  doctrine  is  well  set- 
tled in  Eng-land,  and  by  the  current  of  American  author- 
ities.*^ Even  when  he  had  absconded  to  another  place 
in  the  same  State  or  country,  the  excuse  for  nonpresentment 
would  be  sufficient,  unless  the  holder  knew  where  he  was, 
in  which  case  he  should  seek  him."*^  But  the  absconding 
of  the  maker  or  acceptor  furnishes  no  sufficient  excuse 
for  want  of  notice  to  the  drawer  or  indorser.^*^  AVhen  the 
drawer  or  indorser  has  himself  absconded,  notice  should  be 
left  at  his  last  place  of  abode  or  with  the  person  represent- 
ing his  estate.^^  If  between  the  time  a  note  is  made  or  a 
bill  accepted  and  its  maturity  the  maker  or  acceptor  removes 
from  the  place  at  which  he  resided  and  transacted  business 
to  another  State  or  country,  no  obligation  is  imposed  upon 
the  holder  to  go  out  of  his  ovra  State  in  order  to  make  a 
demand  upon  him  personally,  or  at  his  new  place  of  resi- 
dence or  business.  It  will  be  sufficient  under  such  circum- 
stances to  make  a  demand  at  the  payor's  last  place  of  resi- 
dence or  business,  and  M'hen  that  has  been  done  due  diligence 
requires  no  more.^^  But  when  the  removal  is  to  another 
locality  \\ithiu  the  same  State  or  country,  it  is  the  duty  of 
the  holder  to  seek  and  demand  payment  of  the  promisor 
at  his  new  place  of  residence  or  business. ^^ 

•iSBayley  on  Bills,  196;  Cliitty  on  Bills  [*367],  412;  Lehman  v.  Jones, 
1  Watts  &  S.  126;  Bruce  v.  Lytle,  13  Barb.  163;  Gillespie  v.  Hannahan, 
4  :McCord,  503. 

41)  Reid  V.  Morrison.  2  Watts  &  S.  401;  Duncan  v.  :\IcCullough,  4  Serg. 
&  R.  480. 

50  May  V.  Coffin,  4  Mass.  341. 

61  Sj  parte  Rohde,  Mont.  &  M.  430;  1  Parsons  on  Notes  and  Bills,  528. 

'52McGruder  v.  Bank  of  Washington,  9  Wheat.  598;  Adams  v.  Leland, 
30  N.  Y.  309;  Central  Bank  v.  Allen,  16  Me.  41. 

5^5  Anderson  v.  Drake,  14  Johns.  114;  Louisiana  Ins.  Co.  v.  Sham- 
burgh,  7  Mart.  (N.  S.)  260. 


BOOK  V. 

ACTIONS  AND  DEFENSES. 


CHAPTER  XIY. 

ACTIONS. 


SECTION  I. 

WHO    MAY    SUE. 

§  398.  Holder  with  legal  title  may  sue Any  holder  of  a 

bill  or  note  Avho  can  trace  a  clear  legal  title  to  it,  is  entitled 
to  sue  upon  it  in  his  o\\ti  name,  whether  he  possesses  the 
beneficial  interest  in  its  contents  or  not.^  If  the  note  be 
payable  to  A.  or  B.,  it  may  be  sued  upon  by  them  jointly 
or  by  either  one  of  them.^  If  there  be  a  special  indorse- 
ment, or  assignment  to  a  particular  person,  he  is  the  proper 
person  to  sue;  and  if  he  is  in  possession  he  may  sue  although 
his  name  be  indorsed  on  the  paper,  after  the  special  indorse- 
ment or  assignment.  For  in  such  case  his  indorsement  will 
bo  presumed  to  be  a  mere  memorandum,  or  evidence  that 
he  had  negotiated  the  paper  and  then  taken  it  up.^ 

Agents,  receivers,  assignees,  trustees,  or  personal  repre- 
sentatives, may  sue  on  a  note  or  bill  payable  to  bearer,  or 
indorsed  in  Idank.^  And  the  donee  causa  mortis  of  a  note 
payable  to  the  donor's  order  may  use  the  name  of  his  per- 
sonal representative,  even  against  his  protest.'^     But  a  mere 

1  Caldwell  v.  Lawrence,  84  111.  161;  Harpending  y.  Daniel,  80  Ky.  45G. 

2  Westjrate  v.  Healy,  4  R.  I.  524. 

3  Humphreyville  v.  Culver,  73  111.  485. 

4La.w  V.  Parnell,  7  C.  B.  (N,  S.)  282;  T5owman  v.  Wood,  15  Mass.  5.34; 
Haxtun  v.  Bishop,  3  Wend.  13;  Daniel  on  Negotiable  Instruments.  §  264; 
2  Parsons  on  Notes  and  Bills.  446. 

5  Grover  v.  Grover,  24  Pick.  261 ;  Sessions  v.  Mosely,  4  Cush.  87. 

f2G8] 


§  399.  WHO    MAY    SL'K.  liUl) 

depositary  of  such  a  note  cannot  maintain  suit.''  If  the 
paper  be  indorsed  specially  to  a  particular  person,  none  l)Ut 
such  person  or  his  representative  can  sue.'^  A  party  for 
accommodation  who  pays  the  bill  may  sue  prior  parties,  but 
not  subsequent  ones.  If  an  acceptor  or  maker  for  accom- 
modation ])ays  the  bill  he  cannot  sue  drawer  or  indorscr 
upon  the  bill,  because,  according  to  its  terms,  he  is  liable  to 
them.  But  he  may  sue  the  accommodation  party  for  money 
paid  at  his  request.** 

§  399.  Partnerships;  joint  parties. —  If  a  bill  or  note  be 
made  payable  to,  or  indorsed  si)ecially  to  a  firm,  all  the 
partners  must  join  in  thesuit;"  and  if  so  payable  or  indorsed 
to  A.  &  Co.,  A.  cannot  recover  unless  he  shows  that  he 
alone  composed  the  nominal  firni.^"  If,  in  fact,  he  alone 
composes  the  firm,  the.  title  to  the  paper  is  in  him,  and  no 
indorsement  is  necessary  to  enable  liim  to  maintain  the  suit.^^ 
If  one  of  the  copartners  of  a  firm  should  die,  suit  should 
be  brought  by  the  surHvor  or  survivors ;^^  but  if  the  paper 
be  indorsed  in  blank  to  a  fimi,  either  copartner  may  fill  it 
up  in  his  own  name  and  sue,  even  though  one  of  the  co- 
partners be  dead,^^  and  if  indorsed  to  one  member  of  the 
firm,  it  may  be  filled  up  and  suit  brought  on  it  in  the  firm 
name.^"* 

A  copartner  cannot  sue  a  firm  of  which  he  is  a  member, 
upon  a  bill  or  note  payable  by  it  to  himself,  because  he 
would  be  in  fact  suing  himself;^"  but  if  a  finn  make  its  bill 
or  note  payable  to  the  order  of  a  copartner,  and  the  latter 

c  Shersvood  v.  Roys,  14  Pick.  172. 

7  Daniel  on  Negotiable  Instruments,  §§  692,  llSlo. 

8  Stjjirk  V.  Alford,  49  Tex.  2G0. 

9  Guidon  v.  Robson,  2  Campb.  302. 
lORobb  V.  Bailey,  13  La.  Ann.  457. 
n  Smith  V.  llanie,  74  Ga.  327. 

12  Parsons  on  Partnership,  447. 

iSLovell  V.  Evertson,  11  Johns.  .=52;  Weaver  v.  Bromley,  05  Mich.  213. 

14  Hutchinson  v.  Ci-ane,  100  111.  272. 

15  Parsons  on  Partnership,  510,  note. 


270  ACTIONS.  §  400. 

indorse  it,  the  indorsee  may  sne.^*^  Bnt  if  a  note  indorsed 
by  two  of  three  payees  to  a  third  payee  and  a  stranger  be 
subsequently  indorsed  by  the  third  payee,  the  indorsee  may 
sue  in  his  own  name.^^ 

Joint  parties  n<H  partners  must  all  unite  in  the  action, 
if  living.  On  the  death  of  one  of  them,  the  remedies  for 
collection  survive  to  those  living,  who  may  lawfully  receive 
payment,  and  sue  at  law  or  in  equity,  as  may  be  appropriate, 
"\vithout  uniting  the  personal  representative  of  the  deceased 
joint  party.^^  It  has  been  held  that  one  of  two  joint  owners 
cannot  maintain  an  action  thereon  in  his  own  name,  though 
tlie  note  be  payable  to  bearer  and  be  in  his  possession.^^ 

§  400.  Married  women. —  On  a  bill  or  note  given  to  a  single 
woman,  who  afterward  marries,  the  husband  must  join  her 
in  the  action.^^  If  she  dies,  the  right  of  action  is  in  her 
personal  representative,  not  in  the  husband.^^  If  the  hus- 
band dies,  the  right  of  action  is  in  her,  and  not  in  the  hus- 
band's personal  representative.^^  So  the  right  of  action 
survives  to  the  wife,  upon  a  note  payable  to  husband  and 
wife,  Avhen  the  husband  dies,  and  does  not  pass  to  his  repre- 
sentative.^^ 

On  a  bill  or  note  made  payable  to  a  married  woman 
after  marriage  the  husband  may  sue  alone  as  payable  to 
him,  or  he  may  join  in  an  action  A\'ith  his  wife.^'*  If  pay- 
able to  the  husband,  or  to  his  wife,  in  the  alternative,  he 
should  sue.^ 

The  wife  cannot  sue  her  husband  on  a  note  made  by  him 
to  her  after  marriage;  nor  on  a  joint  and  several  note  made 

IG  Thayer  v.  Bufiimi,  11  Mete.  (Mass.)  398;  Davis  v.  Briggs,  39  Me. 
304. 

17  Goddard  v.  Lyman,  14  Pick.  268. 

IS  Lannay  v.  Wilson,  30  Md.  536 :  Allen  v.  Tate,  58  Miss.  586. 

19  IMeXamee  v.  Carpenter,  56  Iowa,  276. 

2"  Sherrington  v.  Yates,  12  M.  &  W.  855. 

21  Hart  V.  Stevens,  &■  Q.  B.  637. 

22  stanAvood  v.  Stanvi'ood,  17  Mass.  57;  Dean  v.  Richmond,  5  Pick.  461. 

23  May  V.  Boisseau,  12  Leigh,  512;  Draper  v.  Jackson,  16  Mass.  480. 

24  Burroughs  v.  Moss,  10  B.  &  C.  558;  Philliskirk  v.  Pluckwell,  2 
Maule  &  S.  393. 

25  Young  V.  Ward,  21  111.  223. 


§§401,40:^.  WHO  MAY  SUE.  271 

to  lici-  by  liini  and  others;-"  but  in  this  case  if  he  dies  she 
may  sue  the  others.^^ 

It  should  be  observed,  however,  that  the  rights  of  niarriecl 
women,  not  only  Anth  i-eference  to  the  acquisition  of  projj- 
erty  and  her  contractual  powers,  but  with  reference  to  her 
rio-ht  to  sue,  have  been  materially  altered  by  remedial  legis- 
lation in  the  different  States. 

§  401.  Cause  of  action  indivisible. —  It  is  a  general  prin- 
ciple of  law  that  a  party  cannot  divide  an  entire  demand 
or  cause  of  action,  and  maintain  several  suits  for  its  re- 
covery; and  a  recovery  for  part  of  an  entire  demand  will 
bar  an  action  for  the  remainder,  if  due  at  the  time  that  the 
first  action  was  brought.  What  constitutes  an  entire  or 
sine-le  demand  is  often  difficult  to  detennine.  When  a  note 
payable  at  a  future  day  carries  interest  payable  annually 
or  semi-annually,  the  holder  may,  before  its  maturity,  re- 
cover the  interest  as  it  matures  without  barring  an  action 
as  to  the  principal  or  unaccrued  interest,^*  If  the  interest 
be  due  by  a  coupon  or  other  separate  security,  it  can  be 
sued  for  as  an  independent  cause  of  action.-'"^  Whether 
Avhen  the  ])rinciple  of  a  note,  and  its  interest  (not  payable 
by  separate  security),  are  both  mature,  separate  actions  may 
bo  maintained,  for  each  is  controverted,  some  cases  holding 
that  they  are  maintainable;^"  others,  the  opposite.^^  The 
better  opinion  sustains  the  right  to  the  separate  actions. 

§402.  Agents. —  Upon  the  theory  that  the  party  entitled 
to  sue  is  the  one  in  whom  the  instrument  shows  the  legal 
title  to  exist,  it  has  been  held  that,  when  the  bill  or  note 
is  payable  to  a  certain  person  by  name,  but  describing  him 
as  agent  of  another  person  also  named  —  as,  for  instance, 
"A.  B.,  agent  for  C.  D."  — the  suit  must  be  brought  in  the 

2(5  Sweat  V.  Hall,  8  Vt.  187;  Richards  v.  Richards.  2  B.  &  Ad.  447. 

27  Richards  v.  Richards,  2  B.  &  Ad.  447. 

28  Walker  v.  Kimble.  22  111.  537;  Goodman  v.  Goodman,  65  111.  407. 
20  Daniel  on  Xefrotiable  Instruments,  §  1509  et  seq. 

SOAndover  Sav.  Bank  v.  Adams,  1  Allen,  28;  Sparhawk  v.  Willis.  G 
Gray,  163. 

31  Howe  V.  Bradley,  19  Me.  31;   Parsons  on  Contracts,  Vol.  11.  p.  636. 


272  ACTIONS.  ^  -iOu. 

name  of  the  agent,  and  cannot  be  brought  in  the  name  of 
the  principal;^"  and  that  a  fortiori  must  the  suit  be  so 
brought  when  the  instrument  is  simply  payable  to  "A.  B., 
agent/'  no  principal  being  named/^^  But  in  either  case,  the 
better  doctrine,  as  it  seems  to  us,  is  that  either  the  agent 
or  the  principal  might  sue.  If  suit  were  brought  by  the 
agent,  the  possession  conforming  to  the  express  indication  of 
the  paper  would  clearly  sustain  the  action.  If  suit  were 
brought  by  the  principal  whose  name  is  expressed  in  the 
instrument,  possession  by  him  would  be  evidence  that  he  had 
received  from  his  agent  the  instrument  of  which  he  Avas  en- 
titled to  the  beneficial  interest;  and  there  could  be  no  good 
reason  why  it  should  be  necessary  for  the  principal  to  con- 
tinue to  use  liis  agent's  name,  when  it  is  clear  from  the  face 
of  the  paper  that  if  so  used  it  would  be  as  the  representa- 
tive of  his  OA\ai.^^  And  where  the  principal  is  undisclosed 
on  the  face  of  the  paper,  he  might  also  sue  in  his  own  name ; 
but  in  such  case  mere  possession  of  the  paper  would  not 
be  sufficient  evidence  that  he  was  the  principal  intended, 
and  it  would  be  necessary  for  him  to  supply  that  element 
in  his  title  to  recover  by  parol  proof.^^  In  the  case  of  in- 
struments payable  to  bank  cashiers  it  might  be  different. 
Delivery  of  a  note  to  an  agent  without  indorsement  would 
not  authorize  him  to  sue.^^  The  same  principles  apply  to 
agents  of  coii^orations,  public  and  private. 

§  403.  When  payable  to  bearer. —  The  law  is  now  too  well 
settled  to  admit  of  longer  controversy  that  an  action  on  a 
bill  or  note  payable  to  bearer,  or  indorsed  in  blank,  may  be 
maintained  in  the  name  of  the  nominal  holder  who  is  not 
the  0A\Tier  by  the  owner's  consent;  and  that  possession  by 
such  nominal  holder  is  prima  facie  sufficient  evidence  of 
his  right  to  sue,  and  cannot  be  rebutted  by  proof  that  he 
has  no  beneficial  interest,  or  by  anything  else  but  proof  of 

32  Cocke  V.  Dickens,  4  Yerg.  29 ;  Shepherd  v.  Evans,  9  Ind.  260. 

33  Alston  V.  Ilartman,  2  Ala.  699;  Horah  v.  Long,  4  Dev.  &  Bat.  274. 

34  Fail-child  v.  Adams,  16  Pick.  .383:  Johnson  v.  Catlin,  27  Vt.  87. 

35  Rutland,  etc.,  R.  Co.  v.  Cole,  24  Yt.  38. 

36  Nichols  V.  Gross,  26  Ohio  St.  425. 


^404. 


WIKJ     MAY    SUE. 


mala  fidcs?"^  If  it  were  shown  that  the  plaintiff,  npon  suing 
upon  a  note  jjayable  to  bearer  or  indorsed  in  blank,  has  no 
interest  in  it,  and  in  addition  that  he  is  suing  against  the 
will  of  the  ])arty  beneticially  interested,  he  could  not  re- 
cover, as  his  conduct  would  be  in  bad  faith.'"*  It  matters 
not  that  such  nominal  holder  will  receive  the  amount  as 
trustee,  agent,  or  ])ledgee.^'''  The  suit  by  him  holding  the 
paper  shows  his  title  to  recover;  and  it  cannot  matter  to 
the  defendant  who  discharges  the  debt  that  the  plaintiff  is 
accountable  over  to  a  third  party.  Evidence,  however,  that 
the  plaintiff  has  no  interest  in  the  instrument  will  be  com- 
petent when  foundation  has  been  laid  for  its  introduction 
by  offer  to  prove  offset,  or  other  defense,  available  against 
a  tliird  person  who  is  its  true  owner.**  And  if  the  indorse- 
ment be  expressed  "  for  collection,"  it  has  been  held  that 
the  indorsee  is  not  such  a  holder  as  may  sue.'*^  But  in 
England  it  has  been  held  that  if  the  plaintiff  has  neither  an 
interest  in  the  instnuuent  or  right  of  possession  at  the  time 
suit  is  brought,  he  cannot  maintain  the  suit;^  and  this  view 
has  been  upheld  in  Xew  York  under  the  provision  of  the 
code  of  that  State  which  requires  the  real  party  in  interest 
to  sue.^^ 

It  should  be  noted,  however,  that  an  indorsement  in  blank 
by  the  payee  will  not  affect  his  right  to  sue  npon  a  note  pay- 
able to  his  order  while  it  remains  in  his  hands."*^ 

§  404.  Rights  of  holder  under  a  blank  indorsement. —  The 
holder  of  a  note  blank  as  to  the  payee  may  fill  it  up  with 
his  o\Yx\  name  and  sue  npon  it.^"     If  payable  to  a  fictitious 

:i7Deniuth  v.  Cutler,  50  Me.  300;  Rubelman  v.  MeXichol,  1;!  M...  App. 
584. 

38  Tonne  v.  Wasson,  128  Mass.  517. 

"9  Nicolay  v.  Fiitschle.  40  Mo.  G7 ;  King  v.  Fleece,  7  Heisk.  G7;  Bow- 
man V.  Wood,  15  Mass.  534. 

40  Logan  V.  Cassell,  88  Pa.  St.  290. 

41  Rock  County  Nat.  Bank  v.  Hollister,  21  Minn.  385. 

42  Emraett  v.  Tattenham,  8  Exch.  884. 

43  Hays  V.  Hathorn,  74  N.  Y.  486. 

44  Kerrick  v.  Stevens.  58  Mich.  297. 
45Crutcliley  v.  Clarence.  2  :Maule  &  S.  90. 

18 


274  ACTIONS.  §  405. 

person,  it  may  be  sued  on  as  payable  to  bearer.^"  The  holder 
of  such  a  paper,  in  transferring  it,  should  not  use  the  fic- 
titious name,  but  pass  it  by  deliveiy  only,  or  by  indorse- 
ment,^^ and  even  after  the  trial,  where  judgment  has  gone 
for  the  plaintiff  under  the  impression  that  the  indorsement 
had  been  filled  up,  the  correction  being  made  nunc  pro  tunc^^ 

But  the  filling  up  of  the  blank  indorsement  is  formal 
merely,  and  it  is  not  necessary  that  it  should  be  filled  up  at 
all,  for  the  mere  act  of  suing  upon  it  by  the  holder  evi- 
dences his  intention  to  treat  the  indorser  as  a  transferrer 
and  indorser  to  himself.*^  And  if  the  plaintiff  omit  to 
state  in  his  declaration  all  the  indorsements  after  the  first 
indorsement  in  blank,  he  may  strike  out  the  intervening 
indorsements,  and  aver  that  the  first  blank  indorser  indorsed 
immediately  to  himself.^^ 

§  405.  When  indorsement  is  in  full. —  If  the  bill  or  note  be 
not  payable  to  bearer  or  indorsed  in  blank,  or  indorsed 
specially  to  himself,  the  holder  cannot  (unless  authorized 
by  statute)  sue  in  liis  own  name,  for  although  he  may  pos- 
sess the  entire  beneficial  interest,  the  legal  title  is  still  out- 
standing in  his  transferrer,  and  he  must  use  his  name 
in  order  to  maintain  the  suit.^^  By  leaving  the  instrument 
unindorsed,  the  transferrer  necessitates  and  authorizes  the 
use  of  his  name  to  the  recovery  of  the  amount;  and  he 
cannot  object  to  its  use,  or  release  the  action  when  insti- 
tuted.^^ If  the  transferrer  indorses  the  paper,  then  his 
name  cannot  be  used  save  by  his  own  consent;  for  then 
the  legal  title  and  right  to  sue  is  vested  in  his  indorsee.^^ 

46  2  Parsons  on  Notes  and  Bills,  448. 

47  Maniort  v.  Roberts,  4  E.  D.  Smith,  83. 
48Wliitticr  V.  Hayden,  9  Allen,  408. 

40  Rces  V.  Conocoeheague  Bank,  5  Rand.  329;  Poorman  v.  Mills,  35 
Cal.  118. 

50  Rand  V.  Dovey,  83  Pa.  St.  281;  Merz  v.  Kaiser,  20  La.  Ann.  379; 
Byles  on  Bills  [*149],  268. 

51  Allen  V.  Newbury,  8  Iowa,  65 ;  Robinson  v.  Wilkinson,  38  Mich. 
301 ;  Marsh  v.  Hayford,  80  Me.  97. 

52  Paese  v.  Hirst,  10  B.  &  C.  123;  Amherst  Academy  v.  Cowles,  6 
Pick.  427;  Royce  v.  Nye,  52  Vt.  372. 

53  Bowie  V.  Duval,  1  Gill  &  J.  175;  Mosher  v.  Allen,  16  Mass.  451. 


§§  40n,  407.  WHO    MAY     IJK    SUED.  275 

lUit  if  suit  is  commenced  without  his  consent,  ho  nuiy  sub- 
sequently assent  to  it.^"* 

§406.  Possession  prima  facie  evidence  of  ownership. —  i^,v;- 
session  is  in  itself  prima  facie  evidence  of  the  ri<i,ht  of  the 
party  to  sue  and  receive  the  money  when  he  holds  uudcr 
a  legal  title,  and  also  that  the  title,  although  nut  expressly, 
is  actually  vested  in  him.  And  therefore  in  order  to  de- 
feat his  suit,  it  must  be  shown  that  he  is  a  tnala  fide  holder.^"* 
As  said  in  a  Maryland  case  by  Chambers,  J. :  "A  bill  pay- 
able to  bearer,  or  a  bill  payable  to  order  and  indorsed  in 
blank,  will  pass  by  delivery,  and  bare  possession  is  prima 
facie  evidence  of  title;  and  for  that  reason  possession  of 
such  a  bill  would  entitle  the  holder  to  sue."  ^^  And  pos- 
session of  the  note  or  bill  is  prima  facie  evidence  that  the 
same  was  indorsed  by  the  person  by  whom  it  puq:)orts  to 
be  indorsed ;^^  and  production  at  the  trial  is  prima  facie 
evidence  that  it  remains  unjjaid.  But  possession  of  the  in- 
strument is  not  always  necessary  in  order  to  institute  a  suit. 
If  the  holder  has  indorsed  a  note  in  blank  and  pledged  it 
as  collateral  security,  he  may  negotiate  it  to  a  third  person, 
wliile  still  pledged,  and  such  person  may  sue  as  indorsee 
while  it  is  still  in  pledge,  and  maintain  an  action  by  dis- 
charging the  lien  and  producing  the  note  at  the  trial.^* 

SECTIOX  IT. 

WHO    MAY     BE    Sl'ED. 

§  407.  General  principles. —  As  a  general  rule,  the  holder 
may  sue  all  the  prior  parties  on  the  bill  or  note,  but  not 
any  subsequent  party.  Thus  a  payee  may  sue  the  acceptor 
or  maker.  An  indorsee  may  sue  the  acceptor  or  maker, 
and  all  prior  indorsers.  At  common  law  the  holder  might 
commence  and  prosecute  several  actions  against  each  of  the 

MGoIder  v.  Foss,  43  Me.  364. 

55 Wheeler  v.  Johnson,  97  Mass.  39:    Wilson  Se^Yin_l,'  Machine  Co.   v. 
Spears.  50  Mith.  534;  Union  Nat.  Bank  v.  Barber,  56  Iowa,  562. 
'■>6  Whiteford  v.  Burckniyer,  1  (Mil,  127. 
57  Bank  v.  :\rallan,  37  Minn.  404. 
C8  Fisher  v.  Bradford,  7  Greenl.  28. 


270  ACTIONS.  §§  408, 409. 

prior  parties  at  the  same  time;  and  an  action  instituted 
against  one  would  not  preclude  any  other  remedy  against 
the  others.^^  But  satisfaction  hy  any  one  would  discharge 
all  to  the  plaintitf  from  liability  as  to  principal  sum.^** 
Where  a  party  was  liable  in  the  two  characters  of  joint 
drawer  and  of  acceptor,  he  might  be  sued  jointly  ■\\'ith  the 
other  drawers  and  separately  as  acceptor/'^ 

But  by  statute  in  many  of  the  States  an  action  may  be 
maintained  and  judgment  given  jointly  against  all  the  par- 
ties to  a  negotiable  instrument,  whether  drawers,  indorsers, 
or  acceptors,  or  against  any  one,  or  any  intermediate  num- 
ber of  them. 

§  408.  When  indorser  can  sue  acceptor  or  maker. —  The  in- 
dorser  of  a  bill  or  note  cannot  sue  the  acceptor  or  maker 
until  he  has  paid  or  satisfied  it.  But  as  soon  as  he  does 
this  he  may  sue  the  acceptor  or  maker.''^  And  if  one  in- 
dorser sues  a  prior  party,  it  is  not  necessary  for  him  to 
show  that  he  had  received  notice,  provided  it  was  duly  re- 
ceived by  such  prior  party. ^^  "Where  there  are  a  number 
of  indorsers,  any  one  may  sue,  by  arrangement  between 
them,  all  indorsements  subsequent  to  his  being  stricken  out.^* 

§  409.  When  drawer  can  sue  acceptor  and  vice  versa. — 
"  The  drawer,"  says  Mr.  Chitty,  ''  may  maintain  an  action 
on  the  bill  against  the  acceptor,  in  case  of  a  refusal  to  pay 
a  bill  already  accepted,  but  not  on  a  refusal  to  accept,  in 
which  latter  case  the  action  must  be  special  on  the  contract 
to  accept."  ^^  Certainly  the  drawer  may  sue  the  acceptor 
if  he  has  had  to  pay  the  bill,  or  may  leave  it  in  the  hands 
of  the  indorsee  to  sue  for  his  benefit;^*'  but  it  has  been  held 

C9  Chitty  on  Bills  [*538,  539],  610,  611;  Williams  v.  Jones,  79  Ala.  110. 
GO  Ex  parte  Wildman,  2  Ves.  Sr.  115;  Farwell  v.  Hilliard,  3  N.  H.  318. 
«i  Wise  V.  Prowse,  9  Price,  393. 

C2lIoyt  V.  Wilkinson,  10  Pick.  31;  McDonald  v.  Ma^rudcr,  3  Pet.  470. 
€3  Ellsworth  V.  Brewer,  11  Pick.  316. 
64  Walwyn  v.  St.  Quintin,  1  Bos.  &  P.  652. 
enaiitty  on  Bills  [*537],  608. 

cc  Tvouviere  v.  Laubray,  10  l^tod.  36;  Thurman  v.  Van  Brunt,  19  Barb. 
410;  Williams  v.  James,  15  Ad.  &  El.  (N.  S.)  69. 


§    410.  WllK.N    KIGIIT    OF    ACTION    ACCllUKS.  277 

that  he  cannot  recover  without  evidence  that  he  has  jiai<l 
the  bilh*'' 

Where  the  acceptance  is  for  the  diawer's  accommoda- 
tion, and  the  accej)tor  pays  the  bill,  ho  cannot  sue  the 
drawer  upon  the  bill,  for  it  inijiorts  no  liability  to  him,  but 
he  may  sue  for  money  paid  at  his  request.*^**  But  an  acceptor 
for  honor  of  the  drawer  or  iiidorser  may  sue  such  drawer  or 
indorser  upon  the  bill  itself.*'^ 

SECTION^  III. 

WHEN   RIGHT    OF   ACTION   ACCRUES. 

§  410.  Can  suit  be  instituted  on  day  of  maturity? —  While 
the  courts  are  at  war  witli  each  other  on  this  subject,  it 
may  be  confidently  and  fairly  announced  that  the  better 
view  is  that  after  demand  and  refusal  on  the  last  day  of 
grace,  action  may  be  commenced  against  the  maker.'"  But 
in  the  case  of  non-negotiable  contracts  to  be  performed 
upon  a  certain  day,  they  are  really  solvable  Avithiii  that 
day;  and  as  the  promisor  has  the  whole  of  the  day  for  their 
performance,  suit  cannot  be  commenced  until  that  day  has 
passed.'^  But  when  the  maker  of  a  note,  or  the  drawer  or 
acceptor  of  a  bill,  makes  it  payable  on  a  day  certain,  his 
contract  is  to  pay  it  on  demand  on  any  part  of  that  day^ 
if  made  ^dthin  reasonable  hours.''-  The  protest  must  be 
made  on  that  day,  w^hich  presupposes  a  default  already 
made;  and  whether  it  be  the  last  day  of  grace,  or  the  day 
of  maturity,  when  there  is  no  grace,  it  is  clear,  upon  prin- 

fi7  Thompson  v.  Flower,  1  Mart.  ?f.  S.  (La.)  301;  2  Parsons  on  Xote3 
and  Bills,  453. 

68  Bell  V.  Norwood,  7  La.  Oo;  Stark  v.  Alford.  40  Tex.  200. 
^2  Parsons  on  Xotes  and  Bills,  45.'i. 

70  Daniel  on  Xeijotiable  Instniments.  §  1207:  2  Parsons  on  Notes  and 
"Bills.  401,  402:  Staples  v.  Franklin  Bank.  1  Mete.  (Mass.)  43:  Leftly  v. 
Mills,  4  T.  P.  170. 

71  Webb  V.  Fairnianer.  3  ^\.  &.  W.  473;  Coleman  v.  Ewing,  4  Huniphr. 
24L 

72  Leftly  V.  :N[il1s,  4  T.  E.  170;  Greeley  v.  Thnrston,  4  Grcenl.  470; 
Chitty  on  Bills   [•481],  544. 


278  ACTioxs.  §§  411, 412. 

ciple,  that  as  soon  as  payment  is  refused,  the  action  may 
be  commenced.  The  view  announced  in  the  text  is  clearly 
stated  by  the  Supreme  Court  of  Massachusetts  (Chief  Jus- 
tice Shaw  delivering  the  opinion):  "  The  rule  in  regard  to 
notes  like  the  one  in  question  is,  that  the  note  is  payable 
at  any  time,  on  actual  demand,  on  the  last  day  of  grace; 
and  if  such  actual  presentment  and  demand  is  so  made,  and 
payment  is  not  made,  the  maker  is  in  default,  and  notice  of 
dishonor  may  forthwith  be  given  to  the  indorser.  But  if 
no  presentment  or  demand  is  made  by  the  holder  upon  the 
maker,  the  latter  is  not  in  default  until  the  end  of  the  busi- 
ness day."  ^^ 

§411.  Due-bills. —  A  due-bill,  which  is  regarded  in  many 
States  as  a  promissory  note,  is  payable  immediately,  and 
upon  principle  there  is  no  doubt,  we  think,  that  in  such 
States  action  may  bo  l)rought  immediately  on  the  very  day 
of  its  date.  The  due-bill  is  predicated  upon,  and  evi- 
dences the  fact  that  the  debt  is  then  due  —  not  to  be  due 
on  that  day  (which  in  ordinary  contracts  means  the  same 
as  within  that  day),  nor  to  be  due  in  business  hours  of  that 
day  if  demanded,  as  is  the  case  with  respect  to  negotiable 
paper  which  has  a  period  of  time  to  mature.  It  is  true 
that  the  due-l)ill  could  not  be  sued  upon  during  that  frac- 
tional part  of  the  day  preceding  its  making;  but  it  does  not 
follow  that  during  the  remainder  of  the  day  it  is  not  mature 
for  suit.  For  its  vei-y  language  and  nature  purport  that 
it  is  instantly  due;  and  as  a  breach  of  contract  occurs  by 
failure  to  pay  it  instantly,  the  creditor  may  sue  instantly, 
indulgence  for  any  time  being  mere  matter  of  his  discre- 
tion and  pleasure.  This  view  is  sustained  by  well-considered 
authorities,'^*  tliough  not  without  dissent. 

§  412.  Action  lies  against  indorser  as  soon  as  notice  is  put 

in  train  of  transmission In  respect  to  the  indorser,  it  has 

been  held  m  a  number  of  cases  that  suit  against  him  can- 
not be  commenced  until  time  has  elapsed  for  notice  to  be 

73  Pierce  v.  Cate,  12  Cush.  190. 

74  Cammer  v.  Harrison,  2  MeCord,  246;  Dews  v.  Eastham,  2  Yerg. 
403;  Hill  v.  Hei>ry,  17  Ohio,  9;  Daniel  on  Negotiable  Instruments,  §  1211. 


^  413.  WHEN    KIGIIT    OF    ACTION    ACCRUES.  279 

actually  received  by  him,  upon  the  theory  that  the  hoMer'g 
title  is  not  coni])k't('  until  the  indorser  is  actually  notitied 
that  he  is  looked  to  for  payment,  or  at  least  that  time  for 
him  to  receive  such  notice  has  trans|)ired.'^  But  this  is  a 
misconception,  as  we  tliink,  of  the  law  of  notice.  Tho 
holder  must  exercise  due  diligence  to  give  the  indorser  no- 
tice. That  duty  is  fulfilled  when  he  puts  it  in  train  to  reach 
him,  by  sending  it  to  his  business  or  dwelling-house,  or 
depositing  it  in  the  post-office,  as  the  case  may  be.  And  for 
him  to  be  delayed  until  time  for  its  actual  reception  had 
gone  by  would  subject  him  to  the  hazards,  vexations,  and 
uncertainties  of  various  circumstances  which  do  not  legi- 
timately enter  into  the  consideration  of  the  indorser's 
liability."*^ 

But  in  suits  commenced  on  the  last  day  of  grace  against 
an  indorser,  the  plaintiif  must  prove  that  before  the  writ 
was  sued  out  notice  was  deposited  in  the  post-office,  when  he 
lives  in  a  different  place,  or  sent  to  his  residence  or  place  of 
business  when  he  lives  in  the  same.^'  If  the  notice  precedes 
the  suit  ever  so  short  a  time,  it  suffices  ;'^^  but  if  it  does  not, 
it  seems  the  irregularity  cannot  be  cured  by  the  sending 
and  reception  of  notice  after^vard.^^ 

§  413.  Action  upon  dishonor  for  nonacceptance. —  When  a 
bill  is  dishonored  for  nonacceptance,  light  of  action  accrues 
at  once  against  the  drawer,  and  also  against  the  indorsers 
as  soon  as  the  protest  is  made  and  notice  put  in  train  to 
reach  the  party,  -without  waiting  for  the  maturity  of  the 
bill.^*'  And  if  a  note  be  payable  in  respect  to  principal  or 
interest,  in  instalments,  action  will  lie  for  each  instalment 
as  it  falls  due.**^ 

"5  Smith  V.  Bank  of  Washin^iton.  5  Sorg.  &  R.  31S;  Wiggle  v.  Thomas- 
son,  11  Smedes  &  M.  452;  McFarland  v.  Pico,  8  Cal.  626. 

76Shedd  V.  Brett,  1  Pick.  401;  Dennie  v.  Walker,  7  X.  11.  201. 

77  Manchester  Bank  v.  Fellows,  8  Post.  302. 

78  N.  E.  Bank  v.  Lewis,  2  Pick.  125. 

79  N".  E.  Bank  v.  Lewis,  2  Pick.  113:  Stanton  v.  Blossom.  14  Mass.  IIG. 
**•»  Robinson  v.   Ames,   20  Johns.    140;    Lenox   v.   Cook.    S    Mass.    4G0; 

Ballingalls  v.  Oloster.  3  East,  481. 
SI  Tucker  v.  Randall,  2  Mass.  283;  Cooler  v.  Rose,  3  Mass.  221. 


280  ACTIONS.  g§  41.1:,  415. 

SECTION  IV. 

WHEIT  RIGHT  OF   ACTION   EXPIRES. 

§  414.  Origin  of  Statute  of  Limitations. —  At  common  law, 
■when  once  a  right  of  action  accrued,  it  was  immortah  But 
the  disadvantages  of  permitting  remedies  to  be  sought  at 
remote  periods  from  the  time  the  transactions  occurred, 
and  the  desirability  of  having  settlements  while  evidence 
was  readily  obtainable,  led  at  an  early  date  to  the  adoption 
of  statutes  fixing  a  limitation  to  actions.  As  early  as  1270 
an  act  was  passed  relating  to  limitation  of  actions  concern- 
ing real  estate ;  but  personal  property,  and  especially  choses 
in  action,  were  at  that  time  of  so  little  consequence  that 
no  limitation  of  personal  actions  was  prescribed  until  1623. 
In  this  modern  period,  choses  in  action  constitute  a  vast  por- 
tion of  the  property  of  the  country;  and  the  time  at  which 
the  right  to  reduce  them  into  possession  expires  is  a  matter 
of  prime  importance.  It  is  to  be  observed,  in  the  first  place, 
that  statutes  of  limitation  do  not  destroy  the  debt,  but  only 
bar  the  remedy.  Therefore  they  must  be  specially  pleaded, 
and  cannot  be  given  in  evidence  under  a  general  issue.^^ 
And  as  they  do  not  enter  into  the  essence  of  the  contract, 
they  must  be  regailated  entirely  by  the  laws  of  the  country 
where  suit  is  brought.^^ 

§  415.  When  Statute  of  Limitations  begins  to  run. —  The 
statute  of  limitations  begins  to  mm  from  the  very  day  the 
right  of  action  accrues.  Thus  upon  a  bill  or  note  payable 
at  so  many  days  from  the  date,  it  begins  to  run  from  the 
day  of  payment,  and  not  from  the  day  of  date,  but  the 
day  of  maturity  is  excluded  in  the  computation  of  time. 
If  payable  at  sight,  the  statute  runs  from  sight.  If  so 
many  days  after  sight,  or  after  certain  events,  then  from 
the  time  named  after  sight,  or  after  the  events  have  hap- 
pened.^*    If   the   instrument  be  payable    on   demand,    the 

82  Chappie  V.  Dnrsion,  T  C.  &  J.  1. 

83  Daniel  on  Negotiable  Instruments,  §  884. 
84Byles  on  Bills  [*331],  499. 


§  415.  WIIK.N     KKillT    OK    ACTION     EXl'lUKS.  281 

statute  be^vins  to  run  immediately  as  payment  might  be 
immediately  demanded,  or  suit  brought  without  any  pre- 
vious demand.**^  '*  Ou  d<-inaiid  after  date"  is  the  same  as 
on  demand.^"  But  if  payalile  at  a  eertain  time  after  demand, 
or  after  notice,  an  actual  demand  must  be  made,  or  notice 
given,  in  order  to  fix  the  period  of  maturity  when  the  stat- 
ute commences."  When  right  of  action  on  the  instrument 
secured  expires,  all  claim  to  enforce  the  security  which  is 
a  mere  incident  of  the  principal  obligation,  expires  with  it.^ 
The  indorsement  of  an  overdue  note  is  a  new  contract,  and 
the  statute  begins  to  run  in  favor  of  the  indorscr  from  the 
date  of  the  indorsement.^^ 

85  Mills  V.  Davis,  113  N.  Y.  243;  Mobile  Sav.  Bank  v.  McDonnell,  83 
Ala.  .597. 

SOFenno  v.  Gay,  14(5  Mass.  118;  Crim  v.  Starkweather,  88  N.  Y.  339. 

8T  Little  V.  Blunt,  9  Pick.  488;  Massie  v.  Byrd,  87  Ala.  681;  Clayton 
V.  Gosling,  5  B.  &  C.  3G0. 

88  City  of  Fort  Scott  v.  Schulcnberg.  22  Kan.  658. 

89  Graham  v.  Robertson,  79  Ga.  72.  For  more  elaborate  discussion  of 
the  Statute  of  Limitations,  see  post,  §§  481,  482. 


CHAPTER  XY. 

DEFENSES. 

§  416.  Classification. —  The  defenses  that  may  be  inter- 
posed to  an  action  npon  a  negotiable  contract  may  be 
grouped  or  arranged  into  five  classes:  (1)  That  the  defend- 
ant did  not  make  the  instrument;  (2)  that  the  contract  sued 
upon  is  in  law  nonenforceable;  (3)  that  the  plaintiff  is  not 
entitled  to  sue  thereon;  (4)  that  the  obligation  created  has 
been  discharged;  (5)  that  the  action  upon  the  instrument 
ib  barred  by  the  statute  of  limitations. 

§  417.  Classification  elaborated. —  Under  the  first  head,  to 
wit,  the  defendant  did  not  make  the  instrument,  will  be 
discussed  and  disposed  of:  (a)  Forgery;  (h)  material  al- 
terations. Under  the  second,  to  wit,  that  the  contract  sued 
npon  is  in  law  nonenforceable:  (a)  Incapacity  of  the 
party;  (h)  want,  failure,  or  illegality  of  consideration;  (c) 
that  the  paper  was  obtained  by  fraud;  (d)  that  it  was  ob- 
tained by  duress.  Under  the  third,  to  wit,  that  the  plaintiff 
is  not  entitled  to  sue :  That  the  legal  title  to  the  instrument 
is  not  vested  in  the  plaintiff.  Under  the  fourth,  to  wit,  that 
the  obligation  created  has  been  discharged:  (a)  By  pay- 
ment; (h)  by  bankruptcy,  or  assignment  under  insolvent 
laws;  (c)  by  accord  and  satisfaction;  (d)  by  release;  (e)  by 
covenant  not  to  sue ;  (/)  by  substitution  of  another  obligation  ; 
(g)  by  set-off;  (h)  under  what  circumstances  a  surety  or 
guarantor  is  discharged  when  the  principal  is  not.  Under 
the  fifth,  that  the  action  upon  the  instrument  is  barred  by 
the  statute  of  limitations. 

It  will  l)e  seen  that  many  of  the  defenses  enumerated  in 
this  classification  have  been  elaborately  treated  and  disposed 
of  in  other  portions  of  this  volume,  and  they  are  mentioned 
here  for  the  sole  purpose  of  enabling  the  student  to  prop- 
erly appreciate  the  place  they  occupy  in  a  treatise  on  the 
subject  of  defense. 

[282] 


^^  418,  -ii'J.      IJL;!  .L.Ni>AM'    DID   -NOT    -\1AKK   IN.STKUMENT.      283 

SECTION  I. 

THE    DEFENDANT   DID    NOT    MAKE    THE    INSTRUMENT. 

§  418.  Forgery. —  Forgery  is  the  counterfeit  making  or 
altering  of  any  writing  with  the  intent  to  defraud.  The 
most  usual  species  of  forgery  is  fraudulently  writing  the 
name  of  an  existing  person;  but  where  one  is  in  possession 
of  a  paper  containing  a  genuine  signature,  and  fraudulently 
tills  it  up  so  as  to  make  it  appear  to  be  signed  as  maker,  or 
indorser,  or  other  party  to  a  bill  or  note,  it  is  as  much  a  for- 
gery as  if  the  signature  itself  had  been  forged.^  So  where 
one  has  authority  to  fill  up  a  bill  or  note  in  blank,  Aiatli  a 
particular  sum,  and  he  fraudulently  inserts  a  larger  sum, 
it  is  as  much  a  forgery  as  if  he  had  acted  without  any  au- 
thority at  all.^ 

§  419.  Illustrations  of  forg-ery. —  Passing  a  note  sig-ned  by 
one  person  in  his  own  name,  as  the  note  of  another  person 
of  the  same  name,  if  done  with  intent  to  defraud,  is  a  for- 
gery;^ and  so  appending  to  one's  o-\\ti  name  a  false  addition 
of  description,  as  by  residence  or  occupation,  of  another 
person  of  the  same  name;  or  indorsing  a  note  by  another 
person  of  the  same  name  with  the  real  payee,  or  special 
indorser.*  So,  one  who,  with  intent  fraudulently  to  utter 
a  promissory  note  as  the  note  of  a  person  other  than  the 
signer,  procures  to  it  the  signature  of  an  innocent  party, 
who  does  not  thereby  intend  to  bind  himself,  is  guilty  of 
forgery.^  But  where  a  person  falsely  represents  himself  to 
be  the  indorser  of  a  bill,  l>ut  writes  nothing  falsely  himself, 
if  there  be  a  real  person  who  did  indorse  the  bill  in  his  own 
proper  name,  the  offense  will  not  be  forgery,  but  obtaining 

1  Rex  V.  Hales,  17  St.  Trials,  IGl  ;  Puwoll  v.  Commonwealth,  IT  Gratt. 
S-21. 

2Regina  v.  Wilson.  17  L.  J.  M.  ('.  82:  Eex  v.  Hart,  7  Car.  &  P.  f.:)2. 

3  Rex  V.  Parke,  2  Leach  Cr.  L.  (il4. 

4  Rex  V.  Wehh,  Russ  &  R.  C.  C.  72:  Rex  v.  Rogers.  S  Car.  &  P.  020; 
Mead  v.  Young.  4  T.  R.  28. 

3  Commonwealth  v.  Foster.  114  Mass.  311. 


iiJS-i  DEFEA-SE.S.  §§420,421. 

goods  or  money  upon  false  pretences.*'  And  so  as  to  any 
other  genuine  signature,  though  it  be  passed  for  another; 
yet  if  there  be  nothing  upon  the  bill  or  note  to  apply  it  to 
that  person,  it  is  not  a  forgery.''^ 

The  sigiiaturo  of  a  fictitious  name  or  firm,  if  made  with 
intent  to  defraud,  constitutes  forgery.  Thus  uttering  a 
forged  order  for  the  payment  of  money,  signed  "  Rf. 
Venest,"  there  being  no  such  person  in  existence,  is  a  for- 
gery. So  indorsing  a  bill  in  the  fictitious  name  of  "  John 
AVilliams."  « 

§420.  Alteration  is  forgery. —  The  alteration  of  a  com- 
pleted instrument,  by  a  material  change  in  its  terms,  with 
intent  to  defraud,  is  as  plain  a  forgery  as  the  making  of  it 
altogether;  for  it  fraudulently  assumes  to  bind  the  parties 
to  a  contract  to  which  their  consent  is  wanting.*^  Thus, 
where  a  clerk  broke  the  seal  of  a  letter,  and  altered  a  check 
which  it  contained  to  a  larger  amount,  it  was  deemed  a  for- 
gery ;^*^  and  so  any  fraudulent  material  change  in  the  terms 
of  the  paper,  whether  in  amount,  place  of  payment,  or  time 
of  payment.^^  The  making  of  the  bill  or  note  must  be 
counterfeit  and  false  in  order  to  amount  to  a  forgery,  and 
if  real,  though  fraudulently  procured,  it  will  be  a  fraud, 
but  not  a  forgery.  Thus,  where  a  person  writes  a  note  for 
a  certain  sum,  and  procures  another  to  sign  it  as  maker, 
under  the  false  representation  that  it  is  for  a  smaller  sum, 
it  is  not  a  forgery. ^^ 

§  421.  Intent  to  defraud,  and  "  uttering,"  essential. —  An 
intent  to  defraud  is  essential  to  constitute  forgery,  and  al- 
though a  bill  or  note  will  not  be  binding  upon  those  whom 

«Hevey'9  Case,  1  Leach,  229;    Chitty  on  Bills  [*780]. 
TChitty  on  Bills  [*782]. 

8  Commonwealth  v.  Chandler,  Thatcher  Crira.  Cas.  187;  Chitty  on 
Bills  [*782];  Lockett's  Case,  1  Leach,  94;  Taft's  Case,  1  Leach,  172. 

9  Wheclock  v.  Freeman,  13  Pick.  165. 

10  Belknap  v.  National  Bank,  100  Mass.  379. 

11  Rex  V.  Post,  Russ.  &  R.  101;  Rex  v.  Treble,  2  Taunt.  328;  Rex  v. 
Atkinson,  7  Car.  &  P.  669. 

i2Conimomvcalth  v.  ^ankey,  22  Pa.  St.  390;  People  v.  Getchell,  0 
Mich.  496. 


§  422.  UKIKADANT     DID    AOT    .MAKK     IXSTKUMKNT  285 

it  purports  to  Innd  if  their  names  have  been  signed  to  it, 
or  it  has  been  altered  without  authority,  the  j^arty  who  ha; 
ignorantly  or  innocently  executed  or  altered  it  under  a 
supposed  authority,  will  not  be  deemed  guilty  of  a  forgery.^^ 
Kor  will  the  mere  imitation  of  another's  writing,  the  as- 
sumption of  a  name,  or  the  alteration  of  a  written  instru- 
ment, where  no  person  can  be  injured  thereby,  amount  to 
forgery.^* 

The  delivery  of  a  bill  or  note,  or  other  written  contract, 
is  necessary  to  its  validity;  and  so  the  "uttering,"  which 
is  the  term  used  to  describe  the  delivery  by  a  forger  or 
counterfeiter  to  some  person  of  the  forged  instrument,  is 
necessary  in  order  to  complete  the  crime  of  forgery.  Giving 
the  bill  or  note  to  a  confederate  to  utter  is  an  uttering 
thereof.^"* 

§  422.  Adopting  of  forged  signature. —  If  one's  signature  is 
forged,  it  is,  as  a  general  rule,  a  mere  nullity  as  to  him. 
It  is  legally  accurate  to  say  that  he  did  not  make  the  in- 
strument. But  if  the  person  whose  signature  has  been 
forged  pronounces  it  genuine,  or  the  instrument  valid,  the 
question  arises  whether  or  not  such  declaration  renders  him 
liable  as  if  he  were  a  party  to  a  genuine  instrument;  and 
a  variety  of  circumstances  affect  its  just  solution. 

In  the  first  place,  when  third  parties  buy  the  paper  on  his 
assurances  or  representations  of  the  genuineness  of  his 
signature,  or  of  the  validity  of  the  instrument,  or  are  in- 
duced to  act  upon  such  assurances  or  representations,  and 
would  suffer  loss  if  he  were  permitted  to  set  up  forgery  as  a 
defense,  it  is  quite  clear  upon  principles  of  estoppel  that 
such  defense  cannot  be  made,^*^ 

In  the  second  place,  if  no  principle  of  estoppel  applies, 
and  if  through  mistake  a  party  states  that  a  signature  is 
genuine,  and  afterward  ho  discovers  his  error,  and  s]iccdily 

l-"'  RoRCoe's  Cr.  Ev.  505. 
i4Chitty  on  Bills  [•785]. 

15  Rex  V.  Palmer,  Russ.  &  R.  C.  C.  72. 

16  Workman  v.  Wri-jht,  .3:3  Ohio  St.  405;  WoodrufT  v.  Monroe.  33  Md. 
158;  Beeman  v.  Dviik,  11   M.  &  W.  irA. 


2S6  DEFENSES.  §§  423, 424. 

corrects  it,  and  before  the  holder  has  cliangcd  his  relation 
to  the  pa})er,  or  anyone  has  dealt  ^\^th  it  upon  the  faith  of 
his  admission,  forgery  can  ho  successfully  pleaded." 

In  the  third  place,  it  may  be  stated  that  where  the  party, 
knowing  his  signature  to  be  a  forgery,  deliberately  and 
understandingly  adopts  it  as  his  own,  he  would  be  bound, 
because  ratification  thus  made  is  equivalent  to  a  previous 
authority,  provided,  however,  that  an  innocent  third  party 
has  been  induced  to  act  upon  the  faith  of  the  adoption  in 
such  a  way  as  to  suffer  loss  by  its  repudiation.  This  is 
based  upon  the  familiar  principles  of  estoppel.  But  whether 
such  deliberate  adoption  of  a  forgery,  without  the  conse- 
quent loss  to  a  third  party,  acting  on  the  faith  thereof, 
would  be  binding  is  a  mooted  question,  both  in  England  and 
America. ^^ 

§  423.  When  one  party  is  estopped  to  deny  the  genuineness 
of  another's  signature. —  The  relation  of  one  party  to  a  nego- 
tiable instrument  is  often  such  that  he  cannot  deny  the 
genuineness  of  another's  signature,  for,  having  treated  it 
himself  as  genuine,  it  would  be  a  fraud  to  permit  him  to 
assert  the  contrary.  'Having  issued  or  transferred  the  in- 
strument as  genuine  in  all  respects,  he  would  not  only  be 
bound  by  his  guaranty  that  it  is  genuine,  but  it  would  be 
unjust  to  and  fraudulent  upon  others  to  permit  him  to 
deny  it;  and  proof  of  his  having  so  issued  or  used  it  would 
be  sufficient  to  entitle  the  holder  to  recover  against  him.^^ 

§  424.  The  position  of  drawer,  indorser,  drawee,  acceptor, 
and  transferrer  in  this  respect. —  The  position  of  the  drawer 
of  a  bill  before  acceptance,  in  his  relation  to  other  parties, 
is  ordinarily  that  of  the  maker  of  a  note.  If  he  issues  the 
bill,  as  is  generally  the  case,  without  any  other  name  upon 
it  but  his  own,  he  cannot  be  made  responsible  for  the  sub- 
sequent forgery  of  an  indorsement  or  acceptance;   and  if 

17  Daniel  on  Negotiable  Instruments,  §  1352;  Woodruff  v.  Monroe,  33 
Md.  1.58. 

18  Daniel  on  Negotiable  Instruments,  §§  1352o,  1352/),  and  eases  cited. 
i9Hortsman  v.  ITpnsliaw,  11  How.  177:  Meacher  v.  Fort,  3  Hill  (S.  C.) 

227;  Alleman  v.  Wlieeler,  101  Ind.  144. 


§  424.  DKFKXDA.NT     Dili    NOT     MAKE    INSTUUMENT.  287 

the  name  of  the  payee  to  whose  order  the  bill  is  payable, 
or  of  a  special  indorsee,  be  forged,  no  recovery  can  be  had 
against  hini.^'  Kut  if  the  drawer  puts  the  bill  in  circula- 
tion with  the  name  of  the  payee  imbjrsed  upon  it,  he  will 
be  understood,  by  so  doing,  as  athrming  that  the  indorsement 
is  in  the  handwriting  of  the  payee,  or  written  by  his  au- 
thority/'^^ In  respect  to  the  drawee  or  acceptor  of  a  bill, 
it  is  obvious  that  his  relation  to  the  instnunent  is  very 
different  from  that  of  the  ])artics  who  issued  it.  lie  shoidd 
know  his  own  correspondent's  handwriting;  and  therefore 
the  doctrine  is  laid  down  by  numerous  authorities  that  if 
ho  accepts  the  bill,  or  pays  it,  he  cannot  afterward,  on  di~- 
covering  that  the  signature  of  the  drawer  was  a  forgery, 
revoke  the  acceptance,  or  recover  back  the  amount  paid 
under  mistake  from  the  holder  to  whom  he  i)aid  it.^^ 

In  respect  to  the  indorser  of  a  negotiable  instrument 
upon  which  the  name  of  the  drawer,  maker,  acceptor,  or 
of  a  prior  indorser  is  forged,  he,  by  indorsing  it,  warrants 
that  he  has  clear  legal  title  thereto,  and  that-  the.  instrument 
is  the  genuine  article  it  purports  to  be,  and  he  is,  there- 
fore, bound  by  his  indorsement  to  all  parties  subsequent 
to  him,  even  though  the  paper  has  been  discounted  for  a 
prior  party."^  He  is  like  the  drawer  of  a  bill  who  issues  it 
with  such  names  upon  it.  But  if  all  the  names  of  parties 
antecedent  to  his  own  are  genuine,  he  is  then  like  the  drawer 
of  a  bill  who  issues'  it  without  any  names  upon  it;  and  if 
he  pays  it  to  anyone  holding  under  a  forged  indorsement 
subsequent  to  his  own,  he  may  recover  back  the  amount."^ 
If  the  instrument  be  transferred  by  delivery  simply,  the 
act  of  transfer  by  delivery  of  a  negotiable  instrument  falls 
under  the  general  rule  of  law,  that  in  every  sale  of  personal 

20  Daniel  on  Negotiable  Instruments,  §§  735,  1356,  1361. 

21  Ilortsman  v.  Ilcnshaw,  11  How.  177;  Meacher  v.  Fort,  3  Hill  (S.  C), 
227. 

22  Byles  on  IMlls   [*:'.24],  401;  2  Taisons  on  Notes  and  Bills,  590,  591; 
)tory  on  Bills,  §  411. 

23  JIacGiPgor  v.  Rhodes,  6  El.  &  Bl.  206;  Story  on  Notes,  §  3S0:  Star 
[ns.  Co.  V.  Bank.  60  N.  II.  445;  State  Bank  v.  Fearing,  16  Pick.  533. 

2-t  Daniel  on  Negotiable  lii>tninionts,  §§  1225,  1355,  1357. 


2SS  DEFENSES.  §§  425, 426. 

property  the  vendor  impliedly  warrants  that  the  article  is 
in  fact  what  it  is  described  and  purports  to  be,  and  that  the 
vendor  has  a  good  title  or  right  to  transfer  it.""*  Therefore, 
if  the  signature  of  the  indorser  be  forged,  the  bank  dis- 
counting the  bill  or  note  offered  for  discount  with  such  in- 
dorsement upon  it  may  recover  back  the  amount  from  the 
party  from  whom  it  received  it."" 

§  425.  Acceptance  no  admission  of  indorser's  signature. — 
But  the  drawee  who  accepts  or  pays  a  bill  is  never  regarded 
as  thereby  admitting  the  genuineness  of  the  signature  of  an 
indorser;  for  although  it  is  true  that  every  indorser  is  in 
respect  to  his  liability  the  same  as  a  new  drawer  to  the  bill, 
yet  the  acceptor  cannot  be  presumed  to  have  any  such 
knowledge  of  this  signature  as  he  has  of  the  drawer's,  and 
therefore  he  is  not  presumed  to  admit  it.^^  If  the  drawee  or 
acceptor  of  a  bill  were  to  pay  it,  and  it  turned  out  that  the 
indorsement  of  the  payee  or  a  special  indorsee  were  forged, 
the  result  would  be  that  he  could  not  charge  the  amount  in 
account  against  the  drawer,  and  that  the  payment  would  be 
invalid;  but  as  his  act  implies  no  admission  of  the  genuine- 
ness of  the  indorser's  signature,  he  could  recover  back  the 
amount  from  the  holder  to  whom  he  paid  it.^^ 

§  426.  When  money  paid  on  forged  instrument  can,  and 
v/hen  it  cannot,  be  recovered. —  It  is  a  general  principle  of 
lav\'  that  money  paid  under  a  mistake  of  fact  may  be  re- 
covered back.^  And  accordingly,  where  one  pays  money 
on  forged  paper  by  discounting  or  cashing  it,  he  can  always 
recover  it  back,  provided  he  has  not  himself  contributed 
materially  to  the  mistake  by  his  own  fault  or  negligence, 

25  Daniel  on  Negotiable  Instruments,  §§  731,  1358;  Smith  v.  McNair, 
19  Kan.  330. 

26  Burgess  v.  Northern  Bank  of  Kentucky,  4  Bush,  GOO;  Cabot  Bank 
r.  Morton,  4  Gray,  157. 

27  White  V.  Continental  Nat.  Bank,  64  N.  Y.  320;  Story  on  Bills, 
§§  2G2,  412;  Edwards  on  Bills,  190,  290,  400. 

28  United  States  v.  National  Park  Bank,  59  Hun,  495 ;  Canal  Bank  v. 
Bank  of  Albany,  1  Hill  (N.  Y.),  287;  Smith  v.  Chester,  1  T.  R.  654. 

29  Louisiana  v.  Wood.  102  U.  S.  298;  Moses  v.  McTerlar,  2  Burr,  1005  j 
Carpenter  v.  Northboro  Nat.  Bank,  123  Mass.  69. 


§  427.  DEFENDANT    DID    NOT    MAKE    INSTRUMENT. 


289 


and  provided  that  by  an  immediate  or  sufficiently  early 
notice  he  enables  the  party  to  whom  he  has  paid  it  to  in- 
demnify himself  as  far  as  possible.^"  And  now  the  doctrine 
in  favored  that  even  negligence  in  making  the  mistake  is 
no  bar  to  recovery,  unless  it  results  in.  loss  or  damage.-''^ 
But  it  is  undoubtedly  necessary  that  the  maker,  acceptor, 
or  other  party  who  demands  restitution  of  money  paid 
under  a  forged  indorsement,  or  under  a  forged  signature 
of  the  drawer  of  a  bill,  should  make  the  demand  without 
unreasonable  delay  ;^-  but  the  mere  space  of  time  is  not 
important,  provided  it  be  clearly  shown  that  the  holder  will 
be  put  to  no  more  liability,  trouble,  or  expense  by  a 
restoration  then  than  if  it  had  l>een  called  for  on  the  day 
of  payment.^^ 

Yet  there  may  be  circumstances  under  which  the  acceptor, 
who  has  paid  a  bill  under  a  forged  indorsement,  could  not 
recover  the  amount  from  the  holder.  Thus,  if  the  forged 
indorsement  were  u])on  the  bill  at  the  time  when  the  bill 
was  issued  by  the  drawer,  the  drawer  or  acceptor  paying 
it  could  not  maintain  an  action  to  recover  the  amount  from 
the  holder,  for  the  reason  why  such  actions  are  generally 
allowed  would  not  apply.  The  holder  could  himself  recover 
from  the  drawer,  as  the  latter  could  not  deny  the  genuine- 
ness of  signatures  which  he  had  himself  sent  into  the  world. 
For  the  like  reason  the  drawer  or  acceptor  could  charge  the 
amount  in  account  against  the  drawer.^'* 

§427.  Material  alteration;  general  rule. —  Any  change  in 
the  terms  of  a  wi-ittcn  contract  which  varies  its  original 
legal  effect  and  operation,  whether  in  respect  to  the  obli- 
gation it  imports,  or  to  its  force  as  matter  of  evidence,  when 

30  Frank  v.  Lazier,  91  X.  Y.  115;  Lovinger  v.  First  Nat.  Bank,  SI 
Ind.  3o8. 

31  I'nited  States  v.  National  Park  I5ank.  G  Fed.  852;  Fraker  v.  Little, 
24  Kan.  599;  Young  v.  Lelinian,  G3  Ala.  523. 

32  United  States  v.  Clinton  Nat.  Bank,  28  Fed.  357. 

33Koontz  V.  Central  Nat.  Bank,  51  Mo.  275;  2  Parsons  on  Notes  and 
Bills.  598;  ^^^lite  v.  Continental  Nat.  Bank,  64  N.  Y.  316. 
34  Daniel  on  Negotiable  Instruments.  §  13G6. 

19 


290  DEFENSES.  §  428. 

made  by  any  party  to  the  contract,  is  an  alteration  thereof, 
unless  all  the  other  parties  to  the  contract  gave  their  ex- 
press or  implied  consent  to  such  change.  And  the  effect 
of  such  alteration  is  to  nullify  and  destroy  the  altered  in- 
strument as  a  legal  oldigation,  whether  made  with  fraudu- 
lent intent  or  not."'^  If  the  alteration  be  material,  and  made 
with  a  fraudulent  intent,  it  is  forgery;  and  if  innocently 
made,  and  yet  material,  it  vitiates  the  instrument,  although 
it  falls  short  of  being  forge ry.^° 

§  428.  In  what  material  alteration  consists. —  In  order  to 
constitute  an  alteration  material,  it  must  have  the  legal 
effect  of  changing  the  legal  status  or  relationship  of  the 
parties  to  the  instrument.  This  is  true,  without  regard 
to  the  question  whether  it  injures  or  benefits  either  the 
debtor  or  creditor.  Hence,  a  material  alteration  may  consist 
in  changing  its  date,  or  the  time  or  place  of  payment, 
or  the  amount  of  principal  or  interest  to  be  paid,  or 
the  medium  or  currency  in  which  payment  is  to  be  made, 
or  the  number  or  the  relations  of  the  parties,  or  the 
character  and  effect,  of  the  instrument  as  matter  of  obliga- 
tion or  evidence."^  And  the  alteration  may  be  effected  by 
adding  to  the  instrument  some  new  provision,  or  by  sub- 
stituting one  provision  for  another,  or  by  obliterating  or 
subtracting  from  it  some  provision  incorporated  in  it. 
As  has  been  indicated,  it  will  be  no  answer  to  a  plea  of 
alteration  that  its  operation  is  favorable  to  the  parties  af- 
fected by  it,  whether  in  lessening  or  increasing  the  amount 
to  be  paid,  or  in  enlarging  or  abbreviating  the  time  of  pay- 
ment, or  otherwise.  Ko  man  has  a  right  to  vary  another's 
obligations  at  his  discretion,  whether  for  his  good  or 
ill.  It  ceases,  when  thus  varied,  to  be  that  other's  act,  and 
it  is  sufficient  for  him  to  say:     "  This  is  not  my  contract."  ^^ 

ssMersman  v.  Werji^es,  112  U.  S.  141;  Angle  v.  Insurance  Co.,  92  U.  S. 
330;  Heath  v.  Blake,  28  N.  C.  406. 

36  Daniel  on  Negotiable  Instruments,  §  1373. 

•i7  Daniel  on  Negotiable  Instruments,  §  1375;  Drexler  v.  f-^mith.  30 
Fed.  757. 

38  Weir  V.  Walmsley,  110  Ind.  246;  Warden  v.  Ryan,  37  Mo.  App. 
466;  Wager  v.  Brooks,  37  Minn.  392. 


§  42'J.  DKKKNDANT    DIU    NOT    MAKIO    INSTRUMENT.  291 

Even  a  decrease  of  the  amount  de.-troys  the  identity,  and  con- 
fuses the  traces  of  his  obligation,  and  every  reason  of  p.dicy 
and  principle  forbid  that  the  laws  should  tolerate  tampering 
with  tlie  rights  and  engagements  of  others. 

§  429.  Changing  date  of  instrument  and  time  of  payment. — 
Any  change  in  the  date  imparts  a  new  legal  etTect  an<l  ojiera- 
tion  to  it,  and  is  a  material  alteration,  which  avoids  it  as 
against  prior  parties  and  sureties  even  in  the  hands  of  a 
bona  fide  holder  without  notice.^^  The  time  the  instrument 
became  a  subsisting  contract,  and  the  time  when  the  con- 
tract is  to  be  performed  in  many  cases,  and  a  thousand  cir- 
cumstances may  arise  which  may  add  consequence  to  the 
question  when  the  instrument  was  issued.  It  matters  not 
that  the  time  of  payment  by  relation  to  the  date,  may  bo 
prolonged,  for  suffice  it  to  say  it  was  not  the  time  agreed 
on.  Thus,  in  a  case  before  the  United  States  Supreme 
Court,  where  the.jnaker  of  the  note,  drawn  payable  one 
year  from  date,  changed  "  September  11  "  to  "■  October  11  " 
before  delivery,  without  consent  of  his  surety,  it  was  held 
that  the  note  was  avoided  as  to  liim."*^ 

The  alteration  may  be  in  the  year,  or  the  month,  or  tho 
day  of  the  month,  or  in  all  three.'*^ 

Even  where  a  note  was  altered  in  date  to  one  day  pre- 
vious, and  the  effect  as  to  its  time  of  maturity  remained 
unchanged,  because  of  the  circumstance  that  originally  it 
would  have  fallen  due,  as  its  face  imported,  on  Sunday,  and 
therefore  would  have  been  legally  due  on  Saturday,  and  by 
the  change  of  date  it  fell  due  on  Saturday,  so  that  in  point 
of  fact  Saturday  in  either  case  w-as  its  day  of  payment,  it 
was  held  that  it  was  avoided  by  the  alteration.^"  And  the 
decision  seems  clearly  right.  And  accordingly,  an  insertion 
of  a  date  in  a  blank  left  for  that  purpose  in  a  note  intrusted 

39 Master  v.  Miller.  4  T.  R.  320;  Crawford  v.  Wes^t  t^ide  Bank,  100 
N.  Y.  50;  Britton  v.  Dierker,  40  Mo.  392. 

40  Wood  ^^teele,  0  Wall.  SO. 

41  Thonip^P  on  Bills,  111;  Jacob  v.  Hart,  2  Stark.  4.i;  Outhwaite  v. 
Luntley,  4  Wiunj)!).  170;  Walton  v.  Hastings,  4  Campb.  223. 

42  Stevens  v.  Graham,  7  Serg.  &  R.  50.5. 


292  DEFEXSES.  §  430. 

to  the  maker  by  the  indorser,  lias  been  held  not  an  altera- 
tion, as  an  autliority  to  till  the  blank  will  be  implied  from 
the  relations  of  the  parties.'*"^ 

A  change  in  the  time  of  payment  is  obviously  of  the 
same  nature  as  a  change  in  the  date,  identical  in  principle 
and  effect;  and  whether  such  change  delays,  accelerates,  or 
preserves  in  legal  effect  the  time  specified  or  implied  for 
pa^^llent,  it  constitutes  a  material  alteration.^ 

§  430.  Changing  place  of  payment. —  When  the  instrunlent 
has  been  drawn  payable  at  a  particular  place,  the  oblitera- 
tion of  such  place,  so  as  to  make  it  payable  generally,  con- 
stitutes a  material  alteration  as  against  all  the  parties  not 
consenting;"*^  and  likewise  where  no  place  is  designated,  it 
is  a  material  alteration  to  insert  one.'*''  And  a  fortioi'i  it 
is  a  material  alteration  to  obliterate  one  place  and  insert 
another;  as,  for  instance,  to  erase  an  acceptance  payable  at 
"  Bloxham  <fc  Co.'s,"  and  insert  the  name  of  "  Esdaile  & 
Co."  in  lieu.^^  Where  the  drawer  of  a  bill,  after  acceptance 
and  without  acceptor's  consent,  wrote  after  the  acceptance 
"  payable  at  Mr.  B.'s,  Chiswell  street,"  it  w^as  held  a  material 
alteration  and  the  acceptor  discharged  ;^^  though  in  England 
it  was  formerly  held  otherwise.^''*  So,  striking  out  "  in 
London,"  and  thus  making  the  bill  payable  generally.  So. 
adding  to  a  note  "  payable  at  the  Bank  of  Smyrna."  ^"  Even 
a  bona  fide  holder  cannot  recover  upon  an  acceptance  so 
altered,  nor  upon  a  note  so  altered  against  parties  prior  to 
the  one  making  the  alteration.^^      Changing  the  place   of 

43  Mitchell  V.  Culver,  7  Cow.  336. 

44  Bathe  v.  Taylor,  15  East,  412;  Miller  v.  Gilleland,  19  Pa.  St.  119. 

45  McCurbin  v.  Turnbull,  Thompson  on  Bills,  112. 

46Nazro  v.  Fuller,  24  Wend.  374;  Townsend  v.  Star  Wagon  Co.,  10 
Kebr.  615;  Whitesides  v.  Northern  Bank,  10  Bush,  501. 

47  Tidmarsh  v.  Grover,  1  Maule  &  S.  735 ;  Bank  of  Ohio  Valley  v.  Lock- 
\^^ood,  13  W.  Va.  392. 

48  Cowie  V.  Halsall,  4  B.  &  Aid.  197. 

49  Trapp  V.  Spearman,  3  Esp.  57. 

soBurchfield  v.  Moore,  25  Eng.  L.  &  Eq.  123;  Sudler  v.  Collins,  2 
Houst.  538;  Bullard  v.  Insurance 'Co.,  81  Ind.  2.39. 

51  Nazro  v.  Fuller,  24  Wend.  374 ;  Sudler  v.  Collins,  2  Houst.  538. 


§  431.  DEFENDANT    DID    XOT     MAKE    INSTKUMEXT.  21)3 

date  would  change  the  rights  of  the  parties,  and  hence  is  an 
alteration.^^ 

Tlio  effect  of  statutes  in  England  and  in  the  United  States 
which  provide  that  acceptances  of  bills  dra^\^l  payable 
at  a  banking-house  or  other  particular  place  shall  be 
deemed  general  acceptances  do  not  vary  the  principles  a}>- 
plicable  to  alteration,  because,  though  the  acceptance  bo 
general,  the  insertion  of  a  particular  place  induces  the  holder 
to  present  tlie  bill  there,  instead  of  to  the  acceptor  himself. "^^ 

§431,  Change  in  amount  of  principal  or  interest. —  Any 
change  in  the  amount  of  the  principal  for  which  the  instru- 
ment is  executed  is  a  material  alteration,  whether  it  be 
increased  or  lessen jd;  as  where,  for  instance,  the  amount  U 
changed  from  $500  to  $400,  for  it  is  a  palpable  variance  of 
the  instrument's  legal  efi"ect  in  its  most  vital  part.'^  Indeed, 
an  alteration  to  a  larger  amount  is  a  forgery;  and  so  also  of 
a  smaller  amount,  if  with  fraudulent  intent. 

It  has  been  held  that  where  the  principal  altered  a  note 
so  that  its  amount  was  lessened,  and  then  delivered  it  to 
the  payee,  the  surety  was  not  discharged.^''  Certainly  the 
identity  of  the  contract  was  destroyed,  and  it  is  ditKcult  to 
reconcile  this  case  with  the  principles  and  authorities  al- 
ready stated.  Doubtless,  the  idea  that  it  was  a  release,  and 
therefore  a  benefit  to  the  surety,  pro  budu,  had  a  weighty 
influence  with  the  court;  but  the  law  denominates  any 
change  in  the  legal  eifect  of  a  contract  an  alteration,  and 
its  policy  is  to  tolerate  no  tampering  with  written  instru- 
ments. 

Any  addition  of  words  making  the  bill  or  note  bear  in- 
terest when  it  originally  did  not,  or  changing  the  time  when 
interest  should  run,  or  varying  the  percentage  of  interest, 

52]\[ahai\ve  Bank  v.  Douglass,  31  Conn.  170. 

63  Daniel  on  Negotiable  Instruments,  §  1379. 

*4  Bank  of  Commerce  v.  X'nion  Bunk.  3  N.  Y.  230;  Batclielder  v. 
White,  80  Va.  103;  Stevens  v.  Ciraham,  7  i^erg.  Si  K.  ."lO-j;  ilcwins  v. 
Cargill,  67  Me.  554. 

65  Ogle  V.  Graham,  2  Pa.  132. 


294  DEFENSES.  §  432. 

is  of  the  same  character  as  if  it  changed  the  principal.'^* 
If  the  rate  of  interest  be  left  blank,  authority  is  not  implied 
to  the  holder  to  hll  in  an  amount  greater  than  the  legal 
rate,  and  he  would  effect  a  material  alteration  in  doing  so.^*^ 
But  he  may  insert  the  legal  rate.^**  Where  the  words 
"  with  lawful  interest  "  were  written  on  the  comer  of  the 
note;  where  "with  interest  from  date"  were  incorporated 
in  it;  and  where  "  with  interest  "  were  written  by  the  maker 
after  it  had  been  indorsed,  but  before  delivery  to  the  payee, 
it  was  alike  held  to  be  material,  and  to  avoid  the  note  as 
against  nonconsenting  parties ;^°  where  "-with  interest  pay- 
able semi-annually  "  were  inserted  before  delivery  to  payee, 
and  where  they  were  inserted  afterward,  the  surety  was 
discharged ;^'^  and  where  "with  interest"  was  added,  but 
without  fraudulent  intent,  and  "  interest  to  be  paid  an- 
nually." ^^  So  adding,  "  eight  per  cent,  interest;  "  or  "  bear- 
ing ten  per  cent,  interest  from  maturity;"  or  "with  half 
legal  interest  until  maturity;"  and  so  where  "  after  ma- 
turity "  was  added  to  interest  clause ;  and  so  where  the  like 
words  in  the  interest  clause  were  erased.^^  A  change  of 
percentage  is  of  like  effect.  Thus,  where  "  nine  per  cent." 
was  added  to  the  words  of  a  note  "  on  demand  and  interest;" 
and  where  twelve  per  cent,  was  changed  to  ten.^^ 

§  432.  Change  in  medium  of  payment. —  A  change  of  the 
kind  of  currency,  as  by  the  addition  of  the  words  "  in  specie  " 
to  a  bond  after  the  sum;  or  the  word  "gold"  after  the 
term  "  dollars  "  in  a  note ;  or  of  the  denomination,  as  "  from 

56  Harsh  v.  Klepper,  28  Ohio  St.  200;  Woodworth  v.  Anderson,  G3 
Iowa,  503;  Davis  v.  Henry,  13  Nebr.  500. 

5"  Hoopes  V.  Collingwood,  10  Colo.  107. 

58  First  Nat.  Bank  v.  Carson,  60  Mich.  437. 

C9  Warrington  v.  Early,  2  El.  &  Bl.  763;  Brown  v.  Jones,  3  Port.  (Ala.) 
420;  Waterman  v.  Vose,  43  Me.  504. 

eoNeff  V.  Horner,  63  Pa.  St.  327;  Dewey  v.  Reed,  40  Barb.  16. 

«1  Fay  V.  Smith,  1  Allen,  477 ;  Boalt  v.  Brown,  13  Ohio  N.  S.  364. 

e2Hart  v.  Clouser,  30  Jnd.  210;  Lee  v.  Starbird,  55  Me.  491;  Lamar 
T.  Brown,  56  Ala.  157;  Coburn  v.  Webb,  56  Ind.  96;  Dietz  v.  Harder, 
72  Ind.  208. 

63  Ivory  V.  Michael,  33  Miss.  398;  Whitmer  v.  Frye,  10, Mo.  348. 


§  433.  DEFENDANT    DID    NOT    MAKE    IXSTIiUMEXT. 


21)5 


pounds  into  dollars;  from  sterling  pounds  into  current 
pounds/'  even  though  it  could  do  no  possible  injury,  would 
avoid  the  instrument,*^*  and  there  might  be  cases  in  which 
positive  or  possible  injury  would  result.  And  so  the  erasure 
of  such  words  would  equally  amount  to  alteration.^  In  a 
recent  case  before  the  United  States  Supreme  Court,  the 
words  in  an  order  which  made  it  payable  "  in  drafts  to  the 
order  of  II.  G.  A."  were  erased  with  a  pen,  and  ''  in  current 
funds"  inserted  in  their  stead;  and  the  paper  was  held 
avoided  thereby."*'  So,  if  the  instrument  be  payable  in 
goods,  on  the  same  principle,  if  the  style  or  character  of  the  / 
goods  were  changed,  it  would  be  vitiated.  It  was  so  held 
where  a  note  was  payable  ''  in  merchantable  meat  stock," 
and  the  word  "  young  "  was  interpolated  after  merchant- 
able ;*'"  so,  adding  "  good  hard  "  before  "  ^vood,"  or  writing 
"  good  "  before  "  merchantable  wool."  ^'^ 

§  433.  Change  as  to  parties. —  ^Vny  alteration  in  the  per- 
sonality, nimibcr,  or  relations  of  the  parties  is,  as  a  general 
rule,  a  material  alteration.  Thus,  w^here  C,  member  of  the 
firm  of  C.  &  Co.,  obtained  an  accommodation  indorsement 
to  his  individual  note,  and  then  added  "  &  Co."  to  his 
signature,  thus  making  it  his  firm's  note,  it  w^as  held  a  ma- 
terial alteration.*^"  A\^en  there  are  several  makers  or  co- 
sureties, the  addition  of  another  maker  or  cosurety  consti- 
tutes a  material  alteration;  for  the  addition  of  another 
maker  destroys  the  integrity  of  the  original  contract;  and 
the  addition  of  another  cosurety  changes  the  right  of  the 
sureties  in  respect  to  the  proportion  of  contribution  for 
which  each  is  liable  to  the  others."^    And  the  erasure  of  the 

64  Darwin  v.  Rippey,  63  N.  C.  318;  Bogarth  v.  Biccdlovc,  39  Tex.  501; 
Stevens  v.  Grahanf,  7  Serg.  &  R.  505. 

*J5  Church  V.  Howard,  16  Hun,  5. 

«6  Angle  V.  N.  W.,  etc.,  Ins.  Co.,  92  U.  S.  330. 

6T  Mailcnilulo  v.  Follctt,  1  N.  H.  95. 

cs  Scluvalm  v.  :\Iclntyrc,  17  \\'is.  232. 

68  Haskell  v.  Champion,  30  Miss.  136. 

70  Hamilton  v.  Hoopei%  46  Iowa,  516;  Houck  v.  Graham.  100  Ind.  195; 
McVean  v.  Scott,  46  Barb.  379;  Sullivan  v.  Eudisill,  63  Iowa,  158; 
Monson  v.  Drakeley,  40  Conn.  552. 


296  DEFENSES.  §  434. 

name  of  one  of  two  drawers  or  makers,  or  payees,  who  have 
indorsed  the  paper,  or  of  one  of  several  cosureties,  or  the 
name  of  the  payee  and  inserting  another,  is  likewise  a  ma- 
terial alteration.'^^  So  the  substitution  of  one  drawer  or 
drawee,  or  maker  or  comaker  for  another,  is  of  like  effect.'' 
Whether  or  not  the  addition  of  another  name  to  that  of  the 
maker  (when  there  is  but  one)  is  a  material  alteration,  which 
discharges  him,  is  a  question  upon  which  the  authorities  are 
divided.  Applying  sound  principle  to  the  controversy,  it 
would  seem  that  the  alteration  should  be  regarded  as  im- 
material. The  addition  does  not  vary  the  original  maker's 
liabilities  in  any  respect.  There  could  be  no  motive  of  fraud 
upon  him  or  others  to  induce  the  addition.  And  while  it 
-would  come  within  the  letter  of  those  declarations  of  courts 
that  maintain  anything  which  affects  the  integrity  of  the 
instrument  to  be  a  material  alteration,  it  does  not  seem  to 
come  ^^4thin  their  spirit.'^^ 

§  434.  Change  affecting  the  character  of  the  obligation. —  A 
change  in  the  character  or  effect  of  the  instrument,  whether 
in  respect  to  its  obligation  or  to  its  weight  in  evidence,  is  a 
material  alteration.  Thus,  the  addition  of  a  seal  to  the 
signature  of  the  maker  of  a  note  converts  it  into  a  bond, 
against  which  no  plea  of  want  of  consideration  can  be  made, 
and  thus  invests  his  contract  with  attributes  which  he 
declined  to  impart  to  it."^^  Consequently  the  note  is  avoided. 
So  a  bond  is  avoided  by  detaching  the  seal."^^ 

So  when  a  seal  is  added  to  the  name  of  one  of  several 
comakers  of  a  note,  all  are  discharged,  because  the  holder 
could  not  have  the  same  recourse  against  the  three  which 
he   held  before;   one   would  be   estopped  from   denying  a 

71  Mason  v.  Bradley,  11  M.  &  W.  590;  Cumberland  Bank  v.  Hall,  1 
Hals.  215;  McCramer  v.  Thompson,  21  Iowa,  244;  Robinson  v.  Berry- 
man,  22  Mo.  App.  510;  Horn  v.  Bank,  32  Kan.  521. 

72 Davis  V.  Coleman,  7  Ired.  424;  State  v.  Polk,  7  Blackf.  27. 

73  Daniel  on  Nej,'otiable  Instruments,  §§   1388,   1389,  and  cases  cited. 

74  United  States  v.  Linn,  1  How.  104;  Marshall  v.  Gougler,  10  Serg.  & 
R.  164. 

"■'■'  Piercy  v.  Piercy,  5  W.  Va.  199. 


§§  435,  430.      IJEFENDAXT    DID    NOT    MAKE    INSTRUMENT. 


207 


want  of  consideration  which  might  inure  to  the  benefit  of 
all,  and  new  relations  and  obligations  would  be  created. 

The  interlining-  of  the  words  "  jointly  and  severally,"  or 
"  severally,"  or  "  or  either  of  us  "  in  a  note  joint  and  not 
several,  would  be  a  material  alteration,  as  they  would  en- 
graft upon  the  joint  a  several  obligation.'*^  liut  where  a 
joint  note  has  the  effect  to  bind  the  parties  jointly  and 
severally,  the  insertion  of  those  words  would  be  innnaterial, 
because  merely  expressing  what  was  already  implied." 

And  the  changing  of  a  note  from  "  I  promise  "  to  "  \Ve 
promise"  is  material,  because  it  changes  a  joint  and  several 
note  into  one  joint  only.'^'^  Adding  the  word  "  collector  " 
by  the  payee  to  his  name  has  been  held  in  Xew  Jersey  a 
material  alteration.^® 

The  addition  of  the  name  of  a  witness  to  an  instrument 
required  by  law  to  be  witnessed  is  a  material  alteration,  but 
if  the  instrument  need  not  be  witnessed  or  if  it  already  has 
on  it  the  number  of  witnesses  required  by  law,  the  altera- 
tion is  immaterial. 

§  435.  Change  in  consideration. —  It  has  been  held  that  if 
a  bill  be  expressed  generally  "  for  value  received,"  and 
words  are  added  describing  such  consideration  as  "  for  tha 
good-will  and  lease  in  trade  "  of  a  certain  person,  or  "  for  a 
certain  tract  of  land,"  it  is  materially  altered  and  avoided.^" 
The  reasons  assigned  are,  first,  that  it  makes  the  note  a 
confession  in  exadence  of  a  fact  which  might  otherwise  re- 
quire extraneous  proof;  and,  second,  that  it  puts  the  holder 
upon  inquiry  whether  that  consideration  passed.®^ 

g  436.  Change  in  words  of  negotiability. —  The  addition  of 
the  negotiable  words,  ''  or  order,"   or  "  bearer,"  is  not  an 

76Perring  v.  Hone,  2  Car.  &  P.  401  ;  Draper  v.  Wood,  112  Mass.  31.5. 

7T  Gordon  v.  Sutherland,  Thompson  on  Bills,  113;  Miller  v.  Reed,  27 
Pa.  St.  244. 

78  Humphreys  v.  Guillow,  13  X.  H.  385;  Hemmenwaj^  v.  Stone,  7 
Mass.  58. 

70  York  V.  Jones,  43  N.  J.  L.  332. 

SOKnill  V.  Williams,  10  East,  413;  Low  v.  Arprove,  30  Ga.  129. 

812  Ptirsonfi  on  Notes  and  Bills,  562;  Daniel  on  Negotiable  Instru- 
ments, §  1394. 


298  DEFENSES.  §  437. 

alteration  -wlicn  they  were  intended  to  have  been  inserted, 
and  were  accidently  left  out.*^^  But  where  the  eti'ect  of  such 
addition  is  to  impart  negotiability  to  an  instrument  not  da- 
signed  to  be  negotiable,  it  is  a  most  material  alteration  in 
the  nature  of  the  contract,  and  the  bill  or  note  is  thereby 
avoided.**'^  So  the  interlineation  of  "  or  bearer  "  in  a  nego- 
tiable note,  payable  to  a  certain  person  or  order,  is  an  al- 
teration of  it,  because  it  materially  changes  the  manner  of 
its  negotiability.^^ 

§  437.  Immaterial  alterations —  If  the  legal  effect  be  not 
changed,  the  instrument  is  not  altered,  although  some  change 
may  have  been  made  in  its  appearance,  either  by  the  addi- 
tion of  words  which  the  law  would  imply,  or  by  striking 
out  words  of  no  legal  significance.^^  Thus,  writing  out  the 
name  of  the  bank  after  the  name  of  the  signature  "  cashier," 
M'hicli  was  intended  to  bind  the  bank,  is  merely  expressing 
more  clearly  the  legal  effect  of  the  signature,  and  is  not  an 
alteration. ^"^  So  the  insertion  of  a  dollar  mark  before  the 
numerals  expressing  the  amount  in  dollars;  or  insertion  of 
the  word  "  annually "  after  the  interest  clause  in  a  note 
payable  on  or  before  a  certain  time;  or  changing  the  mar- 
ginal figures  so  as  to  conform  them  to  the  written  amount; 
or  the  addition  in  full  of  the  christian  names  of  the  drawers 
whose  surnames  had  been  afiixed  before  the  acceptance;  the 
interlineation  of  the  surname  of  the  payee,  after  delivery; 
the  running  of  a  pen  through  the  words  "  Providence  Steam- 
Pipe  Co.,"  which  was  one  name  under  which  a  firm  did 
business,  and  writing  over  it  their  style  in  the  copartners' 
names,  were  likewise  adjudged  immaterial.*'^     So  also  where 

S2  Kershaw  v.  Cox,  .3  Esp.  246;  Byrom  v.  Thompson,  11  Ad.  &  El.  31. 

83  Bruce  v.  Westcott,  3  Barb.  274;  Johnson  v.  Bank  of  the  United 
States,  2  B.  Mon.  310. 

84  Booth  V.  To  wens,  56  N.  H.  30;  Union  Nat.  Bank  v.  Roberts,  45 
Wis.  373. 

85Tutt  V.  Thornton,  57  Tex.  35;   Fuller  v.  Green,  64  Wis.  164. 

80  Bank  of  Genesee  v.  Patchin  Bank,  13  N.  Y.  309;  Folger  v.  Chase, 
18  Piek.  63. 

87  Houghton  V.  Francis,  29  111.  244;  Leonard  v.  Phillips,  39  Mich.  182; 
8mith  V.  Smith,  1  R.  I.  398;  Blair  v.  Bank  of  Tennessee,  11  Humpkr.  84; 
Manchet  v.  Cason,  1  Brev.  307 ;  Arnold  v.  Jones,  2  R.  I.  345. 


§§  438,  430.     DEFK.NDA.NT    DID    NOT    MAKE    INSTRUMENT.      I^iOO 

a  Lill  was  addressed  to  a  firm  by  the  style  of  "A.  Ji.  6:  Co.," 
and  on  being-  accei)ted  by  them  in  the  name  of  *'A.  «^  U.," 
and  the  address  was  changed  to  conform  to  the  acceptance, 
there  being  no  question  as  to  the  identical  firm  intended, 
and  the  acceptors  being  liable  either  way.**^  It  may  Ije  gen- 
erally stated  that  no  change  in  the  phraseology  of  the  in- 
Ptrnment  is  material  when  it  does  not  essentially  change  its 
legal  effect.*'^ 

§  438.  Change  authorized. — It  is  quite  obvious  that  where 
all  the  parties  to  a  bill  or  note  expressly  agree  to  a  change 
in  any  of  its  terms  they  cannot  complain  of  such  change 
as  an  alteration."''  They  have  as  much  right  to  change  as 
to  make  a  contract.  And  where  all  do  not  consent,  those 
consenting  are  bound,  while  the  rest  are  discharged.^^ 

Consent  may  be  given  before  the  change  is  made,  or  it 
may  be  given  afterward  by  ratification.'-^-  It  may  be  exi^ress, 
or  it  may  be  implied  from  custom,  or  from  the  acts  of  the 
parties."^  AVhere  one  indorses  for  accommodation  of  the 
maker,  a  note  in  which  the  place  of  payment  is  left  blank, 
authority  to  the  maker  to  fill  the  blank  will  be  presumed, 
that  being  indispensable  to  the  negotiability  of  the  instru- 
ment, and  the  use  of  it  for  the  purpose  intended.^* 

§  439.  Rights  of  bona  fide  holder  of  altered  instrument. — 
As  a  general  rule,  the  material  alteration  of  an  instrument 
will  vitiate  it,  even  in  the  hands  of  a  hona  fide  holder  with- 
out notice.  But  when  the  drawer  of  the  bill  or  the  maker 
of  the  note  has  himself,  by  careless  execution  of  the  instru- 
ment, left  room  for  any  alteration  to  be  made,  either  by 
insertion   or  erasure,  without  defacing  it,  or  exciting  the 

8S  Farquhar  v.  Southey,  Moody  &  M.  U. 
89  Holland  v.  Hatch,  15  Ohio  St.  464. 
OOWardlow  v.  List,  41  Ohio  St.  414. 

01  Grimstcad  v.  Briggs,  4  Iowa,  5.59;  Bank  of  Ohio  Valley  v.  Lock- 
wood.  1,3  \V.  Va.  392. 

02  National  State  Bank  v.  Rising,  4  Hun,  793;  Cannon  v.  Grigsby. 
116  111.  1.51. 

93Woodworth  v.  Rank  of  America,  19  Johns.  391;  Clute  v.  Small,  17 
Wend.  238. 

84Wcssell  v.  Glenn,  108  Ta.  St.  105. 


300  DEFENSES.  §  440. 

suspicions,  of  a  careful  man,  he  will  be  liable  upon  it  to  any 
bona  fide  holder  without  notice  when  the  opportunity  which 
he  has  afforded  has  been  embraced,  and  the  instrument  filled 
up  with  a  larger  amount  or  different  terms  than  those  which 
it  bore  at  the  time  he  signed  it.'*^  The  true  principle  ap- 
plicable to  such  cases  is  that  the  party  who  puts  his  paper 
in  circulation,  invites  the  public  to  receive  it  of  any  one 
having  it  in  possession  with  apparent  title,  and  he  is  es- 
topped to  urge  an  actual  defect  in  that  which,  through  his 
act,  ostensibly  has  none.^'^  "  It  is  the  duty  of  the  maker  of 
the  note  to  guard  not  only  himself,  but  the  public,  against 
frauds  and  alterations  by  refusing  to  sign  negotiable  paper 
made  on  such  a  form  as  to  admit  of  fraudulent  practices 
upon  them  with  ease,  and  without  ready  detection."  ^^  The 
inspection  of  the  paper  itself  furnishes  the  only  criterion  by 
which  a  stranger  to  whom  it  is  offered  can  test  its  character, 
and  when  the  inspection  reveals  nothing  to  arouse  the  sus- 
picions of  a  prudent  man,  he  will  not  be  permitted  to  suffer 
when  there  has  been  an  actual  alteration,  to  which  the  payor 
by  his  negligence  contributed.^** 

If  the  alteration  were  made  without  any  fault  on  the 
part  of  the  maker,  drawer,  or  acceptor,  neither  will  then  be 
bound,  although  the  alteration  were  so  skilfully  made  as  to 
escape  notice  upon  careful  observation.  Thus,  where  a 
banker's  check  had  been  dexterously  altered  by  a  chemical 
process,  the  original  sum  being  expunged,  and  a  larger  in- 
serted, the  banker  was  not  allowed  to  recover  of  the  drawer 
more  than  the  sum  for  which  the  draft  actually  called  when 
he  drew  it.^"^ 

§  440.  Effect  of  material  alteration  fraudulently  made — 
AVhen  a  party  to  a  bill  or  note  fraudulently  alters  its  legal 

95  Garrard  v.  Haddan,  67  Pa.  St.  82;  Johnstoti  Harvester  Co.  v.  Mc- 
Lean, 57  Wis.  258;  Lowden  v.  National  Bank,  38  Kan.  533. 

i»G  Van  Duzer  v.  Howe,  21  N.  Y.  538. 

'J7  Zimmerman  v.  Rote,  75  Pa.  St.  188;  Brown  v.  Reed,  79  Pa.  St.  370. 

98  Daniel  on  Negotiable  Instruments,  §  1405;  Blakey  v.  Johnson,  13 
Bush,  204. 

09  Hall  V.  Fuller,  5  B.  &  C.  750. 


§  -i-H.  DEFENDANT    JMJ»    NOT    MAKE    INSTULMENT.  IJOl 

•effect,  lie  not  only  destroys  the  instrument  hy  thus  destroy- 
ing its  legal  identity,  but  he  also  extinguishes  the  debt  for 
which  it  was  given.  And  it  cannot  aftenvard  be  made  the 
basis  of,  or  evidence  for,  a  recovery  in  any  form  of  action 
whatever;^  though,  of  course,  it  might  be  admissible  to  de- 
feat a  claim  on  the  ground  of  fraud,  or  convict  a  party  of 
a  crime.^  It  is  necessary  that  the  law  should  impose  this 
forfeiture  of  the  debt  itself  upon  one  who  fraudulently  tam- 
pers with  the  instrument  which  evidences  or  secures  it;  and 
it  is  done  upon  the  principle  that  "  no  man  should  be  per- 
mitted to  take  the  chance  of  gain  by  the  commission  of 
a  fraud,  without  runniug  the  risk  of  loss  in  the  case  of 
detection."  ^ 

§441.  Effect  of  material  alteration  innocently  made. —  If 
the  alteration  is  material,  and  was  made  innocently,  the  in- 
strument, notwithstanding,  is  vitiated,  and  no  suit  thereon 
ean  be  maintained."*  But  the  holder  may  sue  upon  the  orig- 
inal cause  of  action;^  but  he  could  not  sue  any  party 
whose  remedy,  after  making  payment,  would  be  impaired 
by  the  alteration.^  In  a  New  York  case  the  law  applicable 
to  the  situation  stated  has  been  thus  expressed:  "  If  the 
alteration  was  made  without  fraudulent  intention  the  payee 
may  resort  to  the  original  indebtedness,  if  that  was  inde- 
pendent of  the  note,  and  has  not  been  discharged  by  the 
execution  of  it,  and  pursues  the  maker  upon  that.  But  to 
have  such  resort,  he  must  be  able  to  produce  and  surrender 
the  note."  "  There  is  a  class  of  cases,  however,  that  an- 
nounces the  rule  to  be  that  the  instrument  is  ipso  facio 

1  Wheelock  v.  Freeman,  13  Pick.  1G5;  Booth  v.  Powers,  5G  N.  Y.  31; 
Wallace  v.  Harmstad,  44  Pa.  St.  492. 
^Chitty  on  Bills   [*191],  219. 

3  Newell  V.  Mayberry,  8  Leigh,  254;  Vogle  v.  Ripper,  34  111.  107. 

4  Angle  V.  N.  W.,  etc.,  Ins.  Co.,  92  U.  S.  342;  Harsh  v.  Kleppcr,  20 
Ohio  St.  200;  Booth  v.  Powers,  5G  N.  Y.  31;  Moore  v.  Hutchinson,  GO 
Mo.  429. 

e  Atkinson  v.  Ilawden,  2  Ad.  &   El.   109;   Owen  v.  Hall,  70  Md.   100; 
Slonian  v.  C"ox,  1  Cromp.,  M.  &  R.  471. 
"Aldcrson  v.  Langdale,  3  B.  &  Aid.  tJOO. 
7  Booth  V.  Powers,  56  N.  Y.  31. 


302  DEFENSES.  §§  442,  443. 

avoided,  and  the  original  consideration  forfeited,  regardless 
of  the  intention  with  which  the  alteration  was  made.** 

i<  442.  Effect  of  immaterial  change  with  fraudulent  intent. — 
It  is  said  by  some  of  tlie  a\ithorities,  and  by  Greenleaf  in 
his  treatise  on  Evidence,  that  if  the  alteration  be  fraudu- 
lently made  by  the  party  claiming  under  the  instrument,  it 
does  not  seem  important  whether  it  be  in  a  material  or  an 
immaterial  part;  for  in  either  case,  he  has  brought  himself 
under  the  operation  of  the  rule  established  for  the  preven- 
tion of  fraud;  and  having  fraudulently  destroyed  the  iden- 
tity of  the  instrument,  he  must  take  the  peril  of  all  the 
consequences.^  There  are  cases  that  support  the  conclusion 
just  announced,  but  it  seems  to  be  at  variance  with  cor- 
rect principle.  If  the  change  destroys  the  identity  of  the 
instrument,  it  is  material;  but  it  has  been  well  said,  "  an 
immaterial  alteration  may  be  treated  as  no  alteration;  "  and 
accordingly  held  that  if  the  act  itself  is  immaterial  and  can 
work  no  injury,  it  is  irrelevant  to  inquire  into  the  motives 
wdth  which  it  was  committed.  Intent  not  manifested  in  a 
material  respect  is  nugatory,  and  this  we  conceive  to  be  the 
true  doctrine. ^° 

§  443.  Burden  of  proof  of  alteration. —  The  question  as  to 
the  burden  of  proof  in  respect  to  alterations  is  generally 
affected  by  all  the  surrounding  circumstances;  and  one  fact 
or  another  shifts  it  to  and  fro,  the  jury  being  left  to  weigh 
the  testimony  and  determine  the  issue  with  all  the  lights 
that  can  be  thrown  upon  it."  Very  slight  circumstances 
may  operate  to  shift  the  burden  of  proof,  and  it  has  been 
well  said  by  Ilorton,  C.  J.,  in  Kansas,  that  ''  it  is  impossible 
to  fix  a  cast-iron  rule  to  control  in  all  cases."  ^"     The  au- 

sjJigelow  V.  Stephens,  ;};")  Vt.  525;  Martendale  v.  Follett,  1  N.  H.  99; 
Savings  Bank  v.  Shaffer,  9  Nebr.  1. 

9  Greenleaf  on  Evidence,  vol.  I,  p.  568. 

10  Daniel  on  Negotiable  Instruments,  §  1416;  Moge  v.  Herndon,  30 
Miss.  120. 

iiAdmrs.   of  Beaman   v.    Russell,  20   Vt.    210;    Bailey   v.    Taylor,   11 
Conn.  5.31;  Kountz  v.  Kennedy,  63  Pa.  St.  190. 
12  Neil  V.  Case,  25  Kan.  510. 


§  444.  CONTKACT    SVEU    L'l'ON    XONEM-OKCEABLE.  1303 

thorities  are  every  way  upon  the  proposition,  and  from  the 
resulting  confusion  the  most  that  can  he  generally  said  is 
that  each  case  nmst  rest  largely  upon  its  own  peculiar  sur- 
roundings. Cliief  Justice  llorton,  in  the  Kansas  case  re- 
ferred to,  stated  the  conflict  of  the  cases  on  this  subject 
as  follows:  "This  is  a  vexed  question,  and  the  books  are 
full  of  diverse  decisions.  Four  different  rules  are  gener- 
ally stated.  (1)  That  an  alteration  on  the  face  of  the  writ- 
ing raises  no  presumption  cither  way,  but  the  question  is 
for  the  jury.  (2)  That  it  raises  a  presumption  against  the 
writ iiii:',  and  requires,  therefore,  some  explanation  to  render 
it  achnissible.  (o)  That  it  raises  such  a  presumption  when 
it  is  suspicious,  otherwise  not.  (4)  That  it  is  presumed,  in 
the  absence  of  explanation,  to  have  been  made  before  de- 
livery, and  therefore  requires  no  explanation  in  the  first 
instance.  *  *  *  Generally  the  instrument  should  be 
given  in  evidence,  and  in  a  jury  case  should  go  to  the  jury 
upon  ordinary  proof  of  its  execution,  leaving  the  parties 
to  such  explanatory  evidence  of  the  alteration  as  they  may 
choose  to  offer.  If  there  is  neither  intrinsic  nor  extrinsic 
evidence  as  to  when  the  alteration  was  made,  it  is  to  be 
presumed,  if  any  presumption  is  said  to  exist,  that  the  altera- 
tion was  made  before,  or  at  the  time  of,  the  execution  of 
the  instrument.  Perhaps  there  might  be  cases  when  the 
alteration  is  attended  with  manifest  circumstances  of  sus- 
picion that  the  court  might  refuse  to  allow  the  instrument 
to  go  before  the  jury  until  some  explanation." 

SECTION  II. 

THE  CONTRACT  SUED  UPON  IS  IN  LAW  NONENFOKCEABLE. 

§  444.  Incapacity  of  the  party. —  This  subject  has  been 
heretofore  fully  and  extensively  treated  in  Book  II,  under 
the  head  of  "  Parties  to  the  Instrument,"  ^^  and  repetition 
is  unnecessary.  If  the  party  sued  labor  under  a  legal  disa- 
bility, whether  the  disability  exists  for  the  sake  and  pro- 

is  Avtc.  H  lUi-lOT. 


304  DEFENSES.  §§  445,  446. 

tection  of  the  incapacitated  party,  or  grows  out  of  a  settled 
public  policy,  the  obligation  is  a  nonenforceable  one.  This 
delense  is  available  not  only  as  between  immediate  parties, 
but  also  as  against  a  bona  fide  holder  for  value. 

§  445.  Want,  failure,  of  illegality  of  consideration. —  While 
consideration  is  ])resumed  in  all  cases  of  negotiable  con- 
tracts, and  the  plaintiff  can  rely  upon  this  presumption,  and 
thus  cast  the  burden  of  showing  its  absence  upon  the  de- 
fendant, the  presumption  is  rebuttable,  and  when  the  want 
or  failure  of  a  suthcient  consideration  is  attacked  and  sub- 
stantial evidence  is  offered  to  sustain  this  defense,  the  bur- 
den shifts,  and  it  rests  with  the  plaintiff  upon  the  whole 
case  to  show  by  a  preponderance  of  the  evidence  a  con- 
sideration sufficient  to  support  the  instrument  sued  on. 
The  defense  of  absence  or  failure  of  consideration  is  good 
only  between  immediate  parties. 

The  consideration  is  presumed  to  be  legal,  and,  so  far 
as  presumptions  and  burden  of  proof  are  concerned,  is  gov- 
erned by  the  same  principles  that  apply  to  want  or  failure 
of  consideration;  but  if  in  consequence  of  the  illegality  of 
consideration,  the  instrument  is  by  law  declared  void,  this 
defense  avails  not  only  as  between  the  immediate  parties, 
but  also  against  the  bona  fide  holder  for  value. 

These  general  observations  are  suthcient  in  this  place 
and  connection  —  the  entire  subject  having  been  hereto- 
fore treated  in  a  separate  chapter.^* 

§  446.  Fraud. —  Bishop,  in  his  work  on  Contracts,  defines 
fraud  to  be :  "  Any  spoken  or  acted  falsehood,  whereby  one 
is  induced  to  enter  into  what  in  form  is  a  contract,  under 
the  belief  that  it  is  a  different  thing  from  what  it  is,  or 
that  there  is  for  it  a  motive  which  does  not  in  truth  exist."  ^^ 
In  the  sharp  phrase  of  Lord  Chief  Baron  Pollock,  in 
a  leading  English  case,^^  "  Fraud  cuts  down  everything." 
There  seems  to  be  no  assignable  limit  beyond  which  fraud 

^^Ante,  §§  90-11.5. 

15  Bishop  on  Contracts,  §  643. 

16  Rogers  v.  Hadley,  .32  L.  J.  Exch.   (N.  S.)  248. 


§§447,448.      iM.Ai.NTii'i-  s(.>r   k-ntiti-kd  to  sue.  305 

is  (Ic.stituto  (if  Ic.ual  oflFoet.  '*  It  vitiates  every  transaction, 
whether  of  contract,  of  judicial  proceeding,  or  otherwise, 
into  which  it  enters."  If  a  i)art.v,  tlir(.nt;h  tint  fraud  of 
another,  is  induced  to  execute  a  contract  wholly  diiferent 
from  what  he  meant,  and  he  is  without  Jarhrs  in  the  trans- 
action, the  fraud  i)artakes  of  the  nature  of  a  forgery,  and 
the  instrument  signecl  l)y  him  is  not  in  law  his  contract. 
It  is  not  nu'ndy  voidahlc,  hut  void  —  void  in  the  hands  of  an 
innocent  third  i»arty,  as  well  as  hetween  the  original  i)ar- 
ties.  Tf,  however,  the  fraud  consists  in  the  inducement  or 
consideration  to  the  entering  into  the  contract,  and  the 
party  executed  the  instrument  he  intended  to,  the  defense 
will  avail  hetween  the  immediate  parties,  but  will  not  be 
effectual  against  a  bona  fide  holder  for  value. 

§  447.  Duress. —  "  Duress  is  actual  or  threatened  personal 
violence  or  physical  restraint  to  a  person,  or,  in  some  cases, 
to  the  person's  husband  or  wife  or  near  blood  relative,  or 
to  his  fortune,  such  as  will  induce  him  to  perform  some 
act  under  such  circumstances  that  that  act  is  not  the  prod- 
net  of  his  will."  ^"  This  subject  has  been  elsewhere  treated, 
with  special  reference  to  the  rights  of  bona  fide  holders 
for  value.^**  In  this  connection  the  student  should  remem- 
ber that  duress  is  always  a  good  defense  between  the  par- 
ties to  the  transaction,  and  that  while  the  authorities  are 
not  uniform,  the  current  of  the  decisions  supports  the  view 
that  this  defense  is  good  even  against  the  bona  fide  holder 
for  value. 

SECTION  III. 

THE    PI.ATXTIFF   IS    XOT    EXTITI.ED    TO    SUE. 

§  448.  Legal  title  to  instrument  not  vested  in  plaintiff. —  As 
has  been  seen,  the  transferee  of  a  non-negotiable  contract 
must  bring  action  in  the  name  of  the  original  payee,  to  the 
use  of  the  transferee.  This  is  upon  the  theory  that,  not- 
withstanding the  assignment,  the  legal  title  remains  in  the 

17  Am.  &  Enpr.  Encyc.  of  Law  (2d  cd.).  vol.  X,  p.  321. 
IS  Ante,  §  224. 

20 


306  DEFENSES.  §  -i^S- 

original  owner.  But  the  transfer  of  a  negotiable  contract 
carries  with  it  the  legal  title  thereto,  and  the  owner  thereof 
must  bring  action  in  his  own  name.  It  follows  that  if  the 
plaintiff  is  ijot  the  legal  owner  of  the  instrument,  he 
cannot  maintain  suit  thereon  in  his  own  name.  Any  de- 
fense which  attacks  the  method  and  manner  of  transferring 
the  legal  title  to  a  negotiable  instrument,  or  that  would 
invalidate  the  transfer,  or  any  denial  of  the  existence  of  a 
transfer  to  the  plaintiff,  either  by  delivery,  or  by  indorse- 
ment and  delivery,  as  the  case  may  be,  would,  if  made  out, 
constitute  a  legal  bar  to  an  action  brought  thereon.  What 
has  been  heretofore  said  on  the  subject  of  transfer  by 
indorsement  and  delivery,  and  of  the  steps  that  may  be 
necessary  in  detail  to  effectuate  a  change  of  legal  owner- 
ship from  one  person  to  another,  need  not  be  repeated  here. 
As  to  when  one  can  maintain  suit  in  his  own  name,  and 
when  he  must  sue  in  the  name  of  another,  was  fully  dis- 
cussed in  the  chapter  on  the  subject  of  actions.  It  is  gen- 
erally sufficient  here  to  say  that  if  the  plaintiff  is  not  the 
owner  or  the  agent  or  trustee  of  the  owner,  a  defense  suc- 
cessfully setting  up  the  fact  mil  defeat  recovery. 

SECTION"  IV. 

THE    OBLIGATION    CREATED    HAS    BEEN    DISCHARGED. 

§  449.  Payment,  nature  of. —  By  payment  is  meant  the  dis- 
charge of  a  contract  to  pay  money  by  giving  to  the  party 
entitled  to  receive  it,  the  amount  agreed  to  be  paid  by  one 
of  the  parties  who  entered  into  the  agreement.  Payment 
is  not  a  contract.  It  is  the  discharge  of  a  contract  in 
which  the  party  of  the  first  part  has  a  right  to  demand  pay- 
ment, and  the  party  of  the  second  part  has  a  right  to  make 
payment.  A  sale  is  altogether  different.  It  is  a  contract 
which  does  not  extinguish  a  bill  or  note,  but  continues  it 
in  circulation  as  a  valid  security  against  all  parties.  And 
it  is  necessary  to  constitute  a  transaction  a  sale  that  both 
parties  should  then  expressly  or  impliedly  agree,   the  ono 


§  450.  Oni.IGATIOX     HAS    IJKKN     DISC Jl AUGED.  o07 

to  sell,  and  the  other  to  piirchii.sc;  tlie  paper.^'''  Whether 
the  transactiou  is  a  purchase  or  payment,  is  a  questi<ju  f(n* 
the  jury  where  the  facts  are  in  dispute,  to  be  resolved  ac- 
cording to"  the  intention  of  the  parties,  and  looking  to  tli'- 
substance  of  the  matter  rather  than  its  form,^'^ 

Credit  given  by  the  drawee  of  a  bill,  or  by  a  party  to  a 
bill  or  note,  who  is  liable  for  its  payment  to  the  holder  at 
his  re([uest,  is  equivalent  to  payment."^  But  if  a  bill  ac- 
cepted for  the  drawer's  accommodation  be  sent  to  bank  for 
collection,  and  be  credited  to  the  holder  at  maturity,  it  has 
been  licld  that  the  bank,  as  its  holder,  may  sue  the  ac- 
ceptor." "  Payment  of  a  debt  is  not  necessarily  a  payment 
of  money;  but  that  is  payment  which  the  })arties  contract 
shall  be  accepted  as  payment,"  or  which  the  law  recognizes 
as  such."'^  When  a  party  to  the  instrument  pays  to  the 
holder  the  amount  duv  u])on  it,  he  cannot  show  that  he  was 
acting  as  the  secret  agent  of  another,  and  convert  the  pay- 
ment thus  made  into  a  purchase. 

§  450.  Who  may  make  payment. —  Any  ]5arty  to  a  bill  or 
note  may  pay  it,  and  an  indorser  who  has  been  discharged 
by  failure  of  notice  may  still  sue  a  prior  indorser  or  other 
parties  who  were  not  discharged,  because,  although  not  com- 
pelled to  pay  it,  he  acquires  the  right  of  the  holder  from 
whom  he  took  the  instrument,  or  is  remitted  to  his  o\vn 
rights  as  indoi-see.^'*  But  it  seems  that  if  the  indorser  has 
another  note  given  him  to  secure  and  indemnify  him  for  his 
indorsement,  and,  not  being  notified,  waives  the  defense, 
and  voluntarily  pays  the  bill  or  note,  he  cannot  enforce  the 
note  given  him  as  indemnity.^"'  And  a  stranger  has  no  right 
to  pay  or  discharge  the  contract  of  another,  and   cannot 

lOLanocy  v.  Clark,  64  N.  Y.  209;  Eastman  v.  riumer,  32  N.  PI.  238. 
SODouphorty  v.  Deeney,  4.5  Iowa,  443;  Rand  v.  Barrett,  66  Iowa,  735; 
Swopo  V.  LcfT^npr^^•ell.  72  "Mo.  34S. 
21  Savajre  v.   Merlo.  ,5   Pick.  S3. 
22raeifTo  Bank  v.  ^fifolu'll.  !)  :Nroto.  (Mass.)   207. 

23  IIufTnKuins  v.  Walker.  I'li  fJrutt.  315;  Lionberger  v.  Kincaly,  13 
Mo.  A]->p.  4. 

24  Ellsworth  V.  Brewer,  11   Piek.  316. 
25Baehellor  v.  Priest,  12  Pick.  399. 


308  DEFEXSES.  §  451. 

pay  a  bill  or  note  so  as  to  acquire  the  rights  of  a  holder, 
except  supra  protest,  as  hereinafter  indicated.^**  But  a 
stranger  may  always  purchase  a  bill  or  note  with  the  con- 
sent of  the  holder.  Where  the  drawer,  when  discharged 
by  the  failure  of  the  collecting  agent  of  the  holder  to  pre- 
sent in  due  time,  nevertheless  took  up  and  paid  his  draft, 
but  under  i)rotest,  to  protect  his  credit,  he  was  held  a  mere 
volunteer  with  no  right  to  recover  against  the  collecting 
agent  of  the  holder  through  whose  default  he  was  dis- 
charged from  payment.^' 

§  451.  Payor  should  see  that  holder  traces  legal  title. —  The 
maker  of  a  note  or  the  acceptor  of  a  bill  must  satisfy  him- 
self, when  it  is  presented  for  payment,  that  the  holder  traces 
his  title  through  genuine  indorsements;  for  if  there  is  a 
forged  indorsement,  it  is  a  nullity,  and  no  right  passes  by 
it.  And  payment  to  a  holder  under  a  forged  indorsement 
would  be  invalid  as  against  the  true  owner,  who  might  re- 
quire it  to  be  paid  again.^**  But  the  maker  or  acceptor 
might  recover  back  the  money  as  paid  under  a  mistake  of 
fact.^'"*  When,  however,  the  signature  of  the  drawer  is 
forged,  should  the  drawee  accept  or  pay  the  bill,  he  becomes 
absolutely  bound,  because  it  is  his  duty  to  know  the  drawer^s 
handwriting;  and  if  he  pays  the  money  he  cannot  recover 
it  back.^"  But  acceptance  does  not  admit  the  signature  of 
the  drawer  as  indorser  also;  nor  the  authority  of  an  agent 
to  indorse  a  bill  drawn  by  him  as  agent  of  the  drawer.^^  If 
an  indorser  pays  a  bill  or  note  upon  which  there  is  a  prior 
forged  indorsement,  he  cannot  recover  back  the  amount, 
because  his  indorsement  was  in  itself  a  warranty  that  the 

•    26  Edwards  on  Bills,  535;  Burton  v.  Slaughter,  2G  Gratt.  919. 

27  Harvey  v.  Girard  Nat.  Bank,  119  Pa.  St.  212. 

28  Smith   V.   Chester,   1    T.    R.   054;    Goddard   v.    Morc-hants'   Bank,  2 
Sandf.  247. 

29  Daniel  on  Negotiable  Instruments,  §   1.309  et  scq. 

30  Bank   of   the  United   States   v.   Bank   of  Georgia,    10   Wheat.   333; 
Johnson  v.  Bank,  27  W.  Va.  343. 

31  Robinson  v.  Yarrow,  7  Taunt.  455;  Story  on  Bills,  §  412;  Daniel  on 
Negotiable  Instruments,  §§  538,  539. 


§§  452,  45;].       OBLRlATIOxN     HAS    UKKN     Dl.SClIAKGED. 


309 


prior  iiulorscments  were  genuine.''^  The  payor  should  also 
satisfy  himself  of  the  identity  of  the  iiolder;  for  he  eaimot 
defend  himself  ai;ainst  the  real  i)ayee  by  showing  that  he 
paid  the  amount  <  f  the  hill  or  note  to  another  person  of  the 
SJ'nie  name  in  liood  faith  and  in  the  usual  course  of  business.^** 

§  452.  Payments  under  mistake  of  law  or  fact. —  It  is  a  gen- 
eral principle  that  money  paid  with  knowledge  of  facts,  but 
under  a  mistake  of  law,  cannot  be  recovered  back."^^  But 
a  party  paying  money  nnder  a  mistake  of  the  real  facts  may 
recover  it  back.^'^  Therefore,  where  a  bank  paid  a  post-dated 
clieck  to  a  holder  who  knew  that  the  drawer  was  insolvent, 
and  that  the  drawee  had  no  funds,  but  was  in  exj>ectation 
of  them  that  day,  and  none  were  received  by  the  bank,  it 
was  hekl  that  the  amount  might  be  recovered  back.^^  So 
an  indorser,  discharged  by  laches,  who  pays  a  bill  to  the 
holder  under  a  misrepresentation  of  facts,  may  recover  back 
the  amount,  and  so  if  such  indorser  pays  the  bill,  relying 
on  the  notarial  certificate  of  due  presentment,  when  in  fact 
no  such  ])resentment  was  made.^^ 

i^  453.  Surrender  of  instrument  and  ^ving  receipt  as  evi- 
dence of  payment. —  The  party  making  payment  should  in- 
sist on  the  presentment  of  the  paper  by  the  party  demand- 
ing payment,  in  order  to  make  sure  that  it  is  at  the  time 
in  his  possession,  and  not  outstanding  in  another.  And  if 
at  the  time  he  makes  payment  it  is  outstanding,  and  held 
by  a  bona  fide  holder  for  value,  he  will  be  liable  to  pay  it 
again,  and  a  receipt  taken  will  be  no  protection.^^  The 
party  making  payment  of  the  bill  or  note  should  also  not  *• 
fail  to  insist  upon  its  being  surrendered  up,  as  a  voucher 
that  the  party  receiving  the  money  was  entitled  to  do  so, 

32  Daniel  on  Negotiable  Instruments,  §  672. 
3.!  Craves  v.  Am.  PLxch.  Bank,  17  N.  Y.  205. 

34  Adams  v.  Reeves,  GS  N.  C.  1.34. 

35  National  Bank  of  the  Commonwealth.  1.39  Mass.  51.3. 
3C  Martin  v.  ^lorfjan,  3  ^loore.  035. 

37Milnes  v.  Duncan.  (5  B.  &  C.  G71;  Talbot  v.  National  Bank.  129 
Mass.  67. 

38  Wheeler  v.  Cuild.  20  Pick.  54.'):   Davis  v.  Miller.  14  Gratt.  1. 


310  DEFENSES.  §  454. 

and  also  that  lie  has  jiaid  it  to  hiiu.'"'^  The  possession  of 
the  note  by  the  maker  is  presumptive  evidence  that  he  has 
paid  it;^"  and  so,  likewise,  is  the.  i)ossession  of  the  bill  by 
the  acceptor,  provided  it  can  be  sho^\m  that  it  passed  out  of 
his  hands  after  he  accepted  it,  though  otherwise  it  would 
seem  not."*^ 

In  addition  to  the  surrender  of  the  instrument,  the  fact 
that  it  has  been  paid  should  be  indorsed  upon  the  paper 
itself.  Tliis  at  once  advertises  the  fact  of  payment  to 
every  person  who  might  subsequently  come  into  possession 
of  the  instrument  by  accident  or  fraud.  This  precaution 
is  especially  wise  and  necessary  if  the  instrument  has  been 
paid  before  maturity.  When  an  indorser  makes  payment, 
it  is  especially  desirable  that  he  should  take  i  a  r,eceipt  as 
well  as  require  delivery  of  the  instrument.^^  If  there  be  a 
general  receipt  of  payment  on  the  back  of  the  instrument, 
it  will  be  presumed  that  it  was  made  by  the  maker  or  accep- 
tor, who  was  primarily  liable;  and  this  presumption  would 
exist  even  when  the  drawer  had  possession  and  sued  the 
acceptor  upon  a  bill  indorsed  with  such  a  receipt.^^ 

§  454.  To  whom  payment  may  be  made. —  Payment  of  a  bill 
or  note  should  be  made  to  the  legal  owner  or  holder  thereof, 
or  some  one  authorized  by  him  to  receive  it.'*'*  If  it  bo 
payable  to  bearer  or  indorsed  in  blank,  any  person  having  it 
in  possession  may  be  presumed  to  be  entitled  to  receive 
payment,  unless  the  payor  have  notice  to  the  contrary;*^ 
and  a  pajmient  to  such  person  will  be  valid,  although  he 
may  be  a  thief,  finder,  or  fraudulent  holder.^'' 

.39  Otisfield  v.  Mayberry,  63  Me.  197. 

40Dugan  V.  United  States,  3  Wheat.  172;  Nonis  v.  Badger,  6  Cow. 
449. 

■Jl  Pfiel  V.  Vanbatenberg,  2  Campb.  439;  Barring  v.  Clark,  19  Pick.  220. 

42  Story  on  Notes,  §  452. 

43Scholey  v.  Walsby,  Peake  Cas.  24;  Jones  v.  Fort,  9  B.  &  C.  764. 

44  ytevenson  v.  Woodhull,  19  Fed.  575;  Draper  v.  Rice,  56  Iowa,  114. 

45  Chappelear  v.  Martin,  45  Ohio  St.  132;  Brennan  v.  Mei'chants'  Bank, 
62  Mich.  343. 

40  Bank  of  the  United  States  v.  United  States,  2  How.  711;  Diigan 
V.  United  States,  3  Wheat.  172;  Bank  of  Utica  v.  Smith,  IS  Johns.  2.'50. 


§  455.  OBLIGATION     JIAS     HEEX     DISC11AKGE1>.  311 

It  lias  beoii  liold  that  a  payment  to  any  person  in  actual 
possession  will  still  be  valid,  Wccause,  altlion<ili  he  may  have 
no  legal  title',  he  may  be  the  agent  of  the  actual  owner;-'' 
bnt  this  is  nnsonnd  doctrine,  and  is  not  sui)i)orted  by  the 
weight  of  authority.-***  Bnt  ]»ayment  may  ]>c  safely  made 
to  one  who  is  a  special  indoi'scc,  ah  hough  there  may  be 
subsequent  uncanceled  indorsements  of  himself  and  others 
on  the  paper;-*"  or  to  the  assignee  of  a  bankrupt;^"  or  to 
the  representative. of  a  dead  owner;"'"'^  (u-  to  the  guardian  of 
an  infant  or  insane  pcrson,^^  or  to  the  husband  whose  wife 
is  payee. ^"'  If  the  instrument  be  payable  to  A.  for  the  use 
of  B.,  payment  must  be  made  to  A.^^  Payment  to  one  of 
two  joint  payees  will  extinguish  the  debt,^^  and  likewise  if 
made  to  a  member  of  a  partnership,  or  a  duly  constituted 
officer  of  a  corporation.'''' 

§455.  When  payment  may  be  made. —  Payment  can  only 
be  made  before  maturity  by  consent  of  both  debtor  and 
creditor. ^^  And  it  can  only  be  made  with  perfect  safety  at 
or  after  the  maturity  of  the  instrument,  unless  the  payor 
receives  it  in  his  hands  and  cancels  it;  for  a  payment  be- 
fore maturity  is  not  in  the  usual  course  of  business;  and 
should  the  bill  or  note  afterwards,  and  before  nuUurity, 
reach  the  hands  of  a  bona  fide  holder  for  value  without  no- 
tice,  such   holder   could   enforce   a   second  payment. ^^     If, 

47  Bachellor  v.  Priest,  12  Pick.  40G. 

48  Daniel  on  Negotiable  Instruments,  §  12.30;  Porter  v.  Cushiiian,  19 
111.  572;  Doubleday  v.  Kress,  50  N.  Y.  413. 

40Dugan  v.  United  States,  3  Wheat.  172. 

fioi'.ayley  on  Bills,  320;  2  Parsons  on  Notes  and  Bills,  211. 

til  Bayley  on  Bills,  320;  2  Parsons  on  Notes  and  Bills-,  211;  Chitty  on 
Bills   [*3!)3],  444. 

r.3  Bayley  on  Bills,  320;  2  Parsons  on  Notes  and  Bills,  211;  Chitty  on 
Bills  ['393],  444. 

oa  Chitty  on  Bills  [•393,  394],  444. 

64  Cramlington  v.  Evans,  2  Vent.  307. 

55  Lyman  v.  Gedney,  HI  111.  40G. 

5C  Daniel  on  Negotiable  Instruments,  §  1231. 

STEbersole  v.  Bidding.  22  Ind.  232. 

csBurbridge  v.  ^Manners,  2  Canipb.  193;  Wheeler  v.  Guild.  20  Pick. 
545. 


312  DEFEASES.  §§  450,  457. 

however,  the  instrument  be  paid  at  or  after  maturity  to 
the  hokler,  the  case  is  ditierent.  The  instrument  is  not 
cnlv  extinguished,  but  shoukl  the  holder  fail  to  deliver  it 
up,  and  transfer  it  to  another  party,  such  party  would  re- 
ceive it  with  notice  upon  its  face  that  it  was  overdue,  and 
he  could  acquire  no  better  right  or  title  than  his  transfer- 
rer; and  the  plea  that  it  was  paid  before  the  transfer  would 
be  avaihible  against  him.  Still,  the  payor,  in  making  pay- 
ment after  maturity,  must  be  sure  that  it  is  made  to  the 
then  holder.  For,  if  it  should  have  been  transferred  after 
maturity,  and  before  payment,  to  a  third  party,  a  payment 
to  the  transferrer  would  be  invalid,  and  the  transferee  hold- 
ing the  instrument  could  himself  enforce  payment.^^ 

§  456.  Time  of  day  when  payment  may  be  made. —  Pay- 
ment may  be  demanded  at  any  time  after  the  commence- 
ment of  business  hours  on  the  day  of  maturity  of  the  bill 
or  note.  And  if  payment  be  then  refused,  or  if  the  house 
at  which  the  instrument  is  payable  be  shut  up,  and  no  one 
is  there  to  answer,  it  may  be  treated  as  dishonored,  notice 
given,  and  resort  taken  upon  the  drawer  and  indorsers.^ 
But  the  maker  or  acceptor  has  the  whole  day  in  which  he 
is  privileged  to  make  payment,  and  though  he  should  in 
the  course  of  the  day  refuse  payment,  yet  if  he  subsequently 
on  the  same  day  makes  payment,  it  is  good,  and  the  notice 
of  dishonor  becomes  of  no  avail. ^^ 

§  457.  Ill  what  medium  payment  may  be  made. —  The 
party  bound  to  make  payment  has  no  right  to  do  so  in  any 
other  medium  than  that  expressed  on  the  face  of  the  instru- 
ment —  that  .is,  he  must  make  payment  in  money.*^'^  And 
an    agent    holding    the    instrument    for    payment    can    take 

50  Davis  V.  Miller,  14  Gratt.  1;  Adair  v.  Lenox,  15  Oreg.  493;  Copp- 
man  v.  Bank  of  Kentucky,  41  Miss.  212. 

GO  Ex-  parte  Moline,  1  Rose,  30.3;  Burbridge  v.  Manners,  1  Campb.  193; 
Hine  v.  Allcly,  4  B.  &  Ad.  624. 

61  Hartley  v.  Case,  1  Car.  &  P.  555 ;  Citizens'  Bank  v.  Lay,  80  Va.  440. 

62  Story  on  Bills,  §  419;  Edwards  on  Bills,  550;  Corbett  v.  Hughes, 
75  Iowa,  282. 


g  458. 


OllLKiATKJ-N      11A8     HKKN     DlSCllAKGKU.  o  1  ^i 


itothing  else  but  money.'"  By  inoncy  is  meant  some  medium 
of  exclumge  made  by  law  a  legal  tender  in  payment  of 
debts.  And  if  tbere  be  two  or  more  kinds  of  money  —  i.  e., 
gold,  silver,  and  paper —  either  will  .sutiicc  to  discharge  the 
obligation,  nidess  the  instrument  specifies  that  payment 
shall  1)(!  made  in  a  ])artic-ular  kind  (d"  money,  in  which  event 
the  (Ud)tor  cannot  insist  upon  payment  in  any  other.  It 
is  competent  to  provide  in  the  instrument  for  payment  in 
Icgul-tender  money  of  any  country.  Sometimes  checks, 
drafts,  or  notes  are  offered  by  the  debtor  in  discharge  of 
the  d(d)t,  and  the  creditor  may,  if  he  pleases,  accept  the 
same  in  absolute  discharge  thereof;  l)ut  where  the  check, 
draft,  or  note  is  received  by  the  creditor,  there  is  no  pre- 
sumi)tion  that  he  takes  it  in  payment,  but,  on  the  contrary, 
the  implication  is  that  it  is  only  to  be  regarded  as  payment 
if  cashed  or  paid.^ 

ij  458.  Creditor's  acceptance  of  depreciated  currency  is  abso- 
lute.—  If  the  debtor  tenders  a  depreciated  currency  in  fud 
satisfaction  of  his  debt,  or  any  other  currency  than  gohl 
wdien  it  is  specifically  payable  in  gold,  the  creditor  cannot 
by  ])rotest  accept  the  medium  tendered,  and  then  recover 
tiie  amount  that  gold  exceeded  it  in  value.  He  must  re- 
fuse the  tender  or  accept  it;  and  if  he  accepts  it  ^\4thont 
special  agreement,  he  will  be  considered  to  have  taken  it 
as  offered  in  full  satisfaction."^  And  the  same  rule  applies 
in  all  cases  wdiere  bank  bills  are  tendered  in  discharge  of 
debts  payable  in  money.''*'  In  like  manner,  though  the  in- 
strument be  payable  in  bank  notes,  legal  tender  notes,  or 
other  medium  less  valuable  than  coin,  yet,  if  the  creditor 
tender  g(dd  or  silver  coin,  without  there  being  any  contract 
as  to  the  rate  at  which  it  is  to  be  taken,  and  it  be  received, 
he  cannot  require  it  afterward  to  be  applied  otherwise  than 
a   dollar   of  coin  for  each   dollar  of  the   amount  due,   nor 

03M;uldur  V.  Bevan,  39  Md.  485;  Henimon  v.  Shomon,  24  Kan.  .^ST. 
64  Small  V.  Franklin  Mining  Co.,  flO  Mass.  277;  Davison  v.  City  Bank, 
57  N.  Y.  S2;  Hoartt  v.  Elindos,  00  111.  3.')1. 
65(;ilinaii  v.  ('(iimty  of  Douiilas,  (I  Nov.  27. 
t'O  Daniel  on  No^^otiablo  Instnunonts,  §   1(572  ct  scq. 


^314  DEFENSES.  §  459. 

make  any  counterclaim  for  the  value  of  the  coin  in  excess 
of  the  value  of  the  medium  of  payment  expressed  in  the 
contract.^^ 

§  459.  Appropriation  of  payment. —  AVlien  a  debtor  is  in- 
debted to  the  same  creditor  in  several  items  of  account, 
and  pays  him  a  sum  of  money  in  part  liquidation  of  his 
entire  indebtedness,  it  often  becomes  a  nice  and  important 
question,  not  only  between  debtor  and  creditor,  but  also 
as  to  third  parties,  to  what  item  the  credit  shall  be  applied. 
With  certain  limitations  and  exceptions,  the  following  gen- 
eral principles  apply  in  such,  cases:  (1)  The  debtor  making 
payment  may  appropriate  it  to  whatever  item  he  pleases 
when  the  payment  is  not  imder  compulsion  of  law.''^  (2) 
If  the  debtor  do  not  make  application  of  payment,  the 
creditor  may  apply  it  as  he  pleases  ;^^  and  the  silence  of 
the  debtor  is  construed  as  leaving  the  matter  to  the  payee, 
provided  it  is  not  an  application  peculiarly  injurious  to  him, 
or  against  his  implied  intention.^*^  This  right  in  the  cred- 
itor does  not  apply  to  debts  not  due  if  there  are  debts  al- 
ready due,  nor  to  compulsory  payments,  nor  to  unlawful 
demands,  as  for  usurious  interest;  nor  to  a  debt  denied  or 
disputed  by  the  debtor,  to  the  exclusion  of  the  one  acknowl- 
edged.^^ (3)  When  neither  party  appropriates  tbe  payment, 
tlie  law  will  apply  it  according  to  equitable  principles,  and 
with  regard  to  the  probable  intention  of  the  parties.'^^ 
Hence,  the  law  will  apply  payment  to  the  debt  more  bur- 
densome to  the  debtor,  especially  to  one  bearing  interest, 
or  subjecting  him  to  a  penalty  or  criminal  charge,  rather 
than  to  those  which  are  less  burdensome. ^^     In  accordance 

<i7Bush  V.  Baldrey,  11  Allen,  367. 

GSTayloe  v.  Sandiford,  7  Wheat.  13;  United  States  v.  January,  7 
Cranch,  .572;  Lingle  v.  Cook,  32  Gratt.  272. 

00  Pattison  v.  Hull,  9  Cow.  747 ;  Bennell  v.  Wilder,  67  111.  327. 

70  Smith  V.  Screven,  1  McCord,  368;  Blair  v.  Carpenter,  75  ]\Iich.   167. 

Tl  Bobe  V.  Stickney,  36  Ala.  482;  Blackstone  Bank  v.  Hill,  10  Pick. 
129;  Bro\ra  v.  Lacy,  83  Ind.  436;  Tayloe  v.  Sandiford,  7  Wheat.  13. 

72Chitty  on  Bills  [*403,  404],  455,  456;  Lingle  v.  Cook,  32  Gratt.  272. 

7.3  Wright  V.  Laing,  3  B.  &  C.  165;  Spiller  v.  Creditors,  16  La.  Ann. 
292;  Stone  v.  Seymour,  15  Wend.  29. 


§  4G0.  OBLKiATIO.X    llA.S     liEES     DISCIIAKGED.  315 

with  these  principles,  the  law  will  impute  the  payment  to 
interest  before  principal;  and  where  the  interest  itself  bears 
interest,  it  will  ini])nte  it,  first,  to  interest  on  interest; 
second,  to  interest  on  principal ;  and  third,  to  the  prin- 
cipal.'^"* It  will  also  inii)iite  payment  to  those  debts  which 
are  j)rior  in  date;"'  and  to  nnsecured  in  preference  to  se- 
cured debts,  unless  the  latter  are  secured  by  a  surety,  in 
which  case  the  appropriation  will  be  made  for  his  relief.'^ 

§  460.  Payments  by  partners  and  joint  debtors. —  If  a  part- 
ner owes  a  debtor,  of  whom  his  lirm  is  debtor  also,  and 
pays  the  money  of  the  firm,  it  will  be  appropriated  by  law 
to  the  debt  of  the  lirm;'^  and  if  he  pays  such  debtor  his 
own  money,  it  will  be  appropriated  to  his  own  debt.'*  And 
no  appropriation  will  be  allowed  which  has  the  effect  of  pay- 
ing one  man's  debt  with  another  man's  money, '^  When  a 
person  owes  the  same  debtor  on  joint  and  on  individual  ac- 
count, and  simply  pays  an  amount,  ^\ithout  appropriating 
it  specifically,  or  it  appearing  whether  it  came  from  his  in- 
dividual or  his  joint  funds,  the  creditor  may  apply  it  to 
either  account.*'  "  Where  one  of  several  partners  dies,  and 
the  partnership  is  in  debt,  and  the  surviving  partners  con- 
tinue their  dealings  with  a  particular  creditor,  and  the  lat- 
ter joins  the  transactions  of  the  old  and  new  finns  in  one 
entire  account,  then  the  payments  made  from  time  to  time 
by  the  surviving  partners  must  be  applied  to  the  old  debt."  "^^ 

7-iLasli  V.  Edgerton,  13  Minn.  210;  Starr  v.  Richmond,  30  111.  270; 
Monroe  v.  Fohl,  72  Gal.  508;  Anketel  v.  Converse,  17  Ohio  St.  11. 

"iTi  United  States  v.  Kirkpatrick,  9  Wlieat.  720;  Mils  v.  Fowlkes,  5 
Bing.  X.  C.  4G1 ;  Bobe  v.  Stickney,  3G  Ala.  482. 

7«Lash  V.  Kdgeilon,  13  Minn.  210;  Cole  v.  Withers,  33  Gratt.  204; 
Plain  V.  Roth,  107  111.  594;  ilarryatts  v.  White,  2  Stark.  101. 

■7"  Thompson  v.  Brown,  Moody  &  M.  40. 

7N  Fairchild  v.  Holly,  10  Conn.  175. 

'!» Thompson  v.  Brown,  Moody  &  M.  40. 

so  Van  Rensselaer's  Exrs.  v.  Roberts,  5  Den.  570;  Baker  v.  Staekpole, 
9  Cow.  420. 

81  iSimou  V.  Ingham,  2  B.  &  ('.  72;  Hooper  v.  Keay,  2  Q.  B.  Div.  17S. 


31G  DEl-E.NSES.  §§  401,  402. 

§461.  Payment  supra  protest. —  When  the  bill  has  been 
protested  for  nonpayment,  and  not  before,*'^  a  stranger  may 
pay  it  for  the  honor  of  the  drawer,  or  acceptor  (if  it  has  been 
accepted),  or  of  any  indorser,  or  he  may  pay  it  for  the  honor 
of  all  the  parties  —  for  honor  generally,  as  such  a  payment 
is  termed.  And  such  a  payment  does  not,  like  a  simple  pay- 
ment by  the  original  drawee,  operate  as  a  satisfaction  of  the 
bill,  but  itself  transfers  the  holder's  rights  to  the  party  pay- 
ing, unless  the  party  paying  limits  and  narrows  them.^^  If 
the  payment  is  made  for  the  honor  of  a  particular  indorser, 
the  party  paying  may  sue  such  indorser,  and  all  parties 
prior  to  him  whom  he  could  have  resorted  to,  but  not  sub- 
sequent indorsers,  for  it  stands  like  a  payment  made  at  the 
request  of  the  indorser,  for  whose  honor  it  is  made,  and 
the  payor  supra  protest  narrows  and  limits  his  right  to 
recover  against  them  only.^''  But  if  he  pays  for  honor  of 
the  bill  generally,  it  is  the  same  as  payment  for  the  honor  of 
the  last  indorsee,  and  he  may  recover  against  all  parties  to 
the  hWV^ 

The  privilege  of  payment  supra  protest  is  not  extended 
by  the  law  merchant  to  promissory  notes,  which  are  not  de- 
signed for  such  general  circulation  as  bills  of  exchange,  and 
the  party  making  such  payment  acts  at  his  peril.**' 

§  462.  Payor  supra  protest  is  subrogated  to  rights  of  party 
for  whose  honor  he  pays. —  As  the  party  paying  supra  pro- 
test becomes  substituted,  as  against  parties  anterior  to  the 
one  for  wdiose  honor  he  pays,  to  the  rights  and  remedies 
which  such  party  for  whose  honor  he  pays  would  have  had 
against  them,  had  he  himself  paid,  it  follows  that  the  right 
of  one  who  pays  for  the  honor  of  the  drawer  to  sue  the 
acceptor  depends  upon  whether  or  not  the  acceptance  was 

82Vandewall  v.  Tyrrell,  1  Moody  &  M.  87;  Chitty  on  Bills  [*508, 
509],. 575. 

83  Chitty  on  Bills  [*509],  576. 

84Mertens  v.  Withinf^ton,  1  Esp.  112;  Chitty  on  Bills  [*.509],  577. 

SSFairlcy  v.  Roch,  Lutw.  S91;  Edwards  on  Bills,  441;  Byles  on  Bills 
[*261],  408. 

86  Byles  on  Bills   [*2621;  Story  on  Notes,   §  4.5.3. 


§§403,404.      <jui.1(;ation    has  bken   dischaiiged.  oil 

for  value.**'  lu  Knglaud  il  was  at  lirst  held  that  he  could 
sue  the  acceptor,  whether  he  had  effects  of  tlie  drawer  iu 
his  hands  or  uot;^**  but  this  view  was  subsequently  overruled, 
and  the  doctrine  of  the  text  established.**'-* 

§  463.  Mode  of  making  payment  supra  protest. —  The  party 
proposing  to  make  such  payment  goes  Ijefore  a  notary  public 
after  the  bill  has  been  noted  for  protest  (though  it  is  not 
necessary  that  the  protest  should  have  been  formally  ex- 
tended), and  makes  a  declaration  for  whose  honor  he  makes 
payment,  which  declaration  should  be  recorded  by  the 
notary,  either  in  the  protest  or  in  a  separate  instrument.'^ 
He  must  then,  in  a  reasonable  time,  notify  the  party  for 
whose  honor  he  pays,  otherwise  such  party  will  not  be 
bound  to  refund.®^ 

§  464.  Effect  of  tender. —  Tender  made  by  the  acceptor  of 
a  bill  or  maker  of  a  i)romissory  note  at  maturity  discharges 
the  drawer  and  indorsers  absolutely,  and  stops  the  accrual 
of  interest,  costs,  and  damages  so  far  as  the  primary  debtor 
is  concerned.''^  ]Jut  a  tender  made  after  maturity,  and  after 
the  liability  of  the  drawer  and  indorsers  has  been  fixed  by 
protest  and  notice  of  dishonor,  will  not  discharge  the  obliga- 
tion, either  of  the  primary  or  secondary  debtors,  but  as  to 
all  alike  the  tender  prevents  further  accrual  of  interest  and 
costs.  In  order  to  have  the  effect  heretofore  stated,  the 
person  making  the  tender  must  have  been  not  only  willing 
but  ready,  and  not  only  ready,  but  must  have  actually  offered 
to  ])ay.''^  And  when  a  plea  of  tender  is  made,  it  must  be 
])leaded  with  a  profert  of  the   money.^^     To  constitute  a 

STByles  on  Bills  [*260],  407,  408;  Chitty  on  Bills   [*508],  575. 

83  Ex  parte  Wackerbath,  5  Ves.  574. 

89  Ex  parte  Lambert,  1.3  Vos.  Jr.  179. 

ooVandewall  v.  Tyrrell.  1  Moody  &  M.  87:  Geralopulo  v.  Wieler,  10 
C.  B.  090;  Byles  on  Bill>;  \*1C>()],  407;  Edwards  on  Bills.  441. 

91  Wood  V.  Puph.  7   Ham.  1C4. 

02  Fitch  V.  Hammer.  17  Colo.  .')91  :  Wriirht  v.  Robinson  &  Co..  84  Hun, 
172. 

93  Otis  V.  Burton,  10  N.  H.  433. 

W  Caldwell  v.  Cassidy.  8  Cow.  271:  Adams  v.  Hackensaok  Co.,  15 
Vroom,  638. 


318  DEFENSES.  §§  465,  46(3. 

legal  tender,  inoiici/  iiuist  liavc  been  offered,  and  the  offer 
niust  have  been  al)sohite  and  unconditionaL 

§465.  Bankruptcy  and  insolvency,  laws;  power  of  Congress 
and  of  the  States  to  enact. — •  The  Constitution  of  the  United 
States  gives  Congress  the  power  "  to  establish  ""  *  * 
uniform  laws  on  the  subject  of  bankruptcies  throughout 
the  United  States."  Congress  at  different  periods  in  the 
country's  history  has  enacted  bankrupt  laws  in  accordance 
with  the  provision  of  the  Federal  Constitution  just  quoted, 
the  acts  referred  to  having  been  enacted  in  the  years 
1800,  1841,  1867,  and  1898,  respectively.  At  one  time  it 
was  contended  that  the  clause  of  the  Federal  Constitution 
giving  Congress  power  to  establish  uniform  laws  on  the  sub- 
ject of  bankruptcy  throughout  the  United  States  operated 
to  exclude  the  right  of  the  States  to  legislate  on  the  same 
subject,  and  there  are  decisions  which  support  that  conten- 
tion, but  the  Supreme  Court  of  the  United  States  has  de- 
cided that  there  is  no  such  exclusion,  except  where  the 
power  has  actually  been  exercised  by  Congress;  and  subject 
to  the  modification  just  stated,  the  right  of  the  States  in 
this  respect  is  now  well  established.  In  other  words,  so 
long  as  Congress  does  not  exercise  its  constitutional  power 
in  this  regard,  the  States  have  the  right  to  enact  bankrupt 
or  insolvent  laws  for  themselves,  and  if  it  should  happen 
that  an  act  on  that  subject  is  passed  by  Congress  while 
State  statutes  exist,  as  long  as  the  former  continues  in  force 
on  the  statute  books,  the  latter  are  suspended. 

§  466.  Discharge  by  bankruptcy  or  insolvency  laws. —  The 
right  of  a  debtor  to  a  discharge,  when  it  exists  at  all,  exists 
only  by  virtue  of  the  statute  enacting  the  law;  and  to  deter- 
mine whether,  in  any  case,  a  debtor  has  such  a  right,  refer- 
ence must  be  had  to  the  statute  governing  the  matter.  One 
of  the  principal  objects  of  all  bankruptcy  laws  is  to  dis- 
charge from  liability  debtors  who  are  unable  to  pay  their 
debts  in  full.  In  England,  discretionary  power  is  lodged 
with  the  courts  to  grant  or  refuse  an  absolute  or  a  con- 
ditional discharge,  while  in  the  United  States  the  courts  are 


§§  407,  408.        OBLIGATKXN     HAS     HKKN     I>ISCIIAUGP:D.  IJ  I'J 

generally  compollod   to   discharge   the   debtor   fr(^m   all   lia- 
bility, once  he  is  adjiidi;ed  a  bankrupt. 

§  467.  Accord  and  satisfaction. —  The  giving  by  the.  maker 
or  acceptor  and  the  acceptance  by  the  holder  of  some  col- 
lateral thing  in  discharge  of  the  instrument  is  an  accord 
and  satisfaction,  and  utterly  extinguishes  the  obligation."-' 
For  whatever  amounts  to  satisfaction  of  a  bill  or  note  by 
the  acceptor  or  maker  is  satisfaction  as  to  all  parties  who  are 
collaterally  liable.  Satisfaction  made  by  one  partner  of  a 
firm,  which  are  either  makers  or  indorsers,  discharges  all 
the  partners;  and  so  where  a  person  is  partner  in  two  firms, 
one  of  which  are  the  makers,  and  the  other  indorsers  of  the 
note,  satisfaction  by  him  discharges  both  finns.^'  If  an 
executory  contract  is  the  consideration  of  another  executory 
contract,  both  may  be  mutually  rescinded,  the  giving  up  one 
being  the  consideration  for  giving  uj)  the  other.^'^ 

But  a  contract  upon  an  executed  consideration  cannot  be 
discharged  either  l)efore  or  after  the  breach,  save  by  a  re- 
lease, or  by  satisfaction  for  a  valuable  consideration.^^  If 
the  holder  of  a  bill  or  note  renounces  his  claim  and  gives 
up  the  instrument,  the  drawer  and  indorsers  are  as  much 
discharged  as  by  payment,  and  he  cannot  sue  the  maker  or 
acceptor  upon  it.  And  having  voluntarily  relinquished  the 
evidence  of  the  debt,  it  may  be  doubted  if  he  could  sue  the 
maker  or  acceptor  at  all.'^^ 

§  468.  Part  payment  is  ordinarily  only  payment  pro  tanto. — 
A  part  payment  of  a  bill  or  note  which  has  fallen  due  only 
extinguishes  it  pro  tanto,  and  an  agreement  that  it  shall  be 
in  full  discharge  of  the  debt  does  not  make  such  part  pay- 
ment any  more  eifectual  as  to  the  residue,  there  being  n<^ 
suiRcient    consideration    for   the    discharge   of   the    wdiolo.^ 

95  Shade  v.  Creviston,  03  Ind.  592. 

»fi  Atkins  V.  Owens,  4  Nev.  &  IMan.  123. 

07  Kinjr  V.  (Jillot,  7  M.  &  W.  .5.5. 

aSByles  on  Hills  | '224,  225].  3G7,  368;  2  Parsons  on  Notes  and  Bills, 
235. 

89  Daniel  on  Xegotiable  Instruments,  §  12SS, 

1  Fitch  V.  Sutton.  5  East.  230;  Bender  v.  Been,  78  Iowa,  283;  Carro- 
way  V.  Odeneal,  56  Miss.  223. 


320  DEFENSES. 


469. 


But  any  agreement  by  way  of  compromise,  or  composition, 
into  which  any  new  element  entered,  would  be  sustained, 
and  if  the  claim  were  disputed,  agreement  to  receive  part 
payment  in  full  would  discharge  it."  After  a  smaller  amount 
than  the  existing  debt  has  been  accepted  in  full  satisfaction 
by  way  of  compromise,  there  is  no  consideration  for  a  note 
afterward  executed  for  the  amount  released  by  the  creditor.^ 
But  if  the  part  payment  were  before  maturity,  or  were 
made  by  a  stranger,  or  was  made  by  a  bill  or  note  with  a 
surety,  or  collateral  security,  or  were  in  any  way  more  ad- 
vantageous to  the  creditor,  it  would  suffice  to  support  any 
agreement  based  upon  it.^  The  same  rule  would  apply  if  a 
number  of  notes,  some  of  which  were  due  and  some  of  which 
were  not  due,  were  delivered  iip  for  less  than  face  value; 
and  also  if  the  old  note  were  by  agreement  surrendered  up 
for  a  new  one,  the  contract  then  being  executed.^  Where 
suit  had  been  brought  on  a  note,  and  a  compromise  was 
effected,  the  holder  agreeing  to  indorse  on  the  note  a  credit 
of  $50,  if  defendant  would  pay  balance  on  a  certain  day, 
and  under  this  agreement  suit  was  dismissed,  it  was  held, 
that  on  failure  of  defendant  to  pay  the  balance  the  payee 
might  erase  the  credit  given.^ 

§  469.  Release A   release  is   technically   an   instrument 

under  seal,  the  seal  importing  a  consideration.  But  the 
release  of  a  party  to  a  bill  or  note  by  any  agreement,  upon 
a  valuable  consideration,  is  as  effectual  as  if  made  under 
seal.'^  And  it  discharges  a  joint  party,  and  all  parties  who 
are  subsequent  to  the  one  released,  and  might  have  looked 
to  him  on  making  payment  for  reimbursement.     It  is  not 

2Sibree  v.  Tripp,  15  M.  &  W.  23;  Cumber  v.  Wane,  1  Stra.  425;  Wells 
V.  Morrison,  91  Ind.  62;  Murray  v.  Snow,  37  Iowa,  410. 

3  Rasmussen  v.  State  Nat.  Bank,  11  Colo.  304. 

4Bowker  v.  Childs,  3  Allen,  434;  Welby  v.  Drake,  1  Car.  &  P.  557; 
Hardman  v.  Bellhouse,  9  M.  &  W.  596;  Lewis  v.  Jones,  4  B.  &  C.  506. 

SBowker  v.  Childs,  3  Allen,  434;  Draper  v.  Hill,  43  Vt.  439;  Ellsworth 
V.  Fogg,  35  Vt.  255. 

6  Chamberlin  v.  White,  79  111.  549. 

7  Benjamin  v.  MeConnell,  4  Gilni.  530;  Milliken  v.  Browne,  1  Rawle, 
391. 


^^470,471.        OBLKiATlON     JIAS     liKKS     OISC  Jl  AltCED. 


321 


necessary  that  the  releasor  should  be  the  holder  of  the 
iu8truiMcnt  at  the  thue  of  making  the  release.*  But  a  re- 
lease of  a  drawee  before  he  accepts  is  no  bar  to  a  suit  on 
his  acceptance,  for  it  can  only  operate  on  existing  rights.^ 

If  there  is  not  a  technical  release  under  seal,  which,  as 
has  been  said,  imports  a  consideration,  no  agreement  can 
operate  as  a  release,  unless  it  is  upon  a  sufficient  considera- 
tion.^" A  verbal  agreement  of  the  payee  of  a  note  with  the 
maker  to  release  him,  and  accept  a  third  party  in  his  stead, 
Avho  signs  in  pursuance  of  such  agreement,  is  upon  sufficient 
consideration,  and  is  valid. ^ 

§  470.  Covenant  not  to  sue. —  A  general  covenant  not  to 
sue  the  maker  or  acceptor  will  operate  as  an  extinguishment 
of  the  debt  as  to  him,  and  will,  of  course,  operate  as  a  dis- 
charge of  the  drawer  and  indorsers.^^  But  such,  a  covenant 
does  not  discharge  another  who  is  jointly  liable  with  the 
covenantee  ;^^  nor  will  such  a  covenant  not  to  sue,  given  by 
one  of  two  creditors,  operate  as  a  release.^*  And  a  covenant 
not  to  sue  for  a  limited  time  will  not  affect  a  release  as 
between  the  parties  (though  it  will  discharge  the  sureties), 
unless  it  be  stipulated  that  it  may  be  pleaded  in  bar.^^  Xor 
will  an  agreement  not  to  sue  for  a  limited  time  discharge  the 
party  with  whom  it  is  made.^*^ 

§471.  Substitution  of  another  obligation. —  The  substitu- 
tion of  another  debtor,  or  of  another  obligation,  or  of  an- 
other security  for  the  instrument,  if  the  intention  of  the 
parties  be  really  to  suhstifitle  the  one  for  the  other,  will 
operate  as  a  discharge  of  all  liability  upon  the  instrument 
for  Avhich  the  substitute  was  given.     In  other  words,  the 

s  Scott  V.  Lefford,  1  Campb.  24G ;  Flanagan  v.  Bro\\Ti,  70  Cal.  254. 
0  Hartley  v.  Manton,  5  Q.  I?.  247 ;  Brage  v.  Netter,  1  Ld.  Raym.  65. 
lO-Keeler  v.  Bartine,  12  Wend.  110;  Carter  v.  Zemblin,  G8  Ind.  405. 
"Carpenter  v.  Murphee,  49  Ala.  84;  Lyon  v.  Aiken,  70  Iowa.  IG. 

12  Story  on  Notes,  §  409;  Byles  on  Bills,  384;  First  Nat.  Bank  v.  Day, 
C4  Iowa,  120. 

13  Dean  v.  Newhall,  S  T.  R.  IGS;  Twopenny  v.  Young,  3  B.  &  C.  208. 
l-lWalmsley  v.  Cooper.  11  Ad.  &  El.  21G. 

ISDrage  v.  Netter,  1  Ld.  Raym.  65;  Hartley  v.  Manton,  5  Q.  B.  247. 
iCFord  V.  Beech,  11  Q.  B.  842. 
21 


322  DEFENSES.  §§  472, 473. 

doctrine  of  siibstituticii  and  the  legal  eifect  thereof  depend, 
after  all,  upon  the  agreement  between  the  parties,  and  are 
governed  by  the  general  law  of  contracts.^' 

§  472.  Set-off;  meaning  and  nature  of. —  By  set-off  is  meant 
the  discharge  of  one  claun  by  another,  which  is  "  set  off  " 
against  it.  It  was  formerly  sometimes  called  "  stoppage," 
because  the  amount  sought  to  be  set  off  was  "  stopped  "  or 
deducted  from  the  cross-demand. 

Set-off  was  unkno^^m  to  the  common  law,  it  being  con- 
sidered inconvenient  to  try  two  opposing  claims  in  one  suit. 
But  still  greater  inconvenience  arose  from  disallowing  it; 
and  courts  of  equity  first  introduced  it,  the  want  of  it  at 
law  being  productive  of  great  mischief. 

Set-off  has  been  made  the  subject  of  legislation  both  in 
England  and  in  most,  if  not  all,  of  the  United  States,  a 
statute  with  reference  to  the  setting  off  of  cross  demands 
having  been  enacted  in  Virginia  as  early  as  the  year  164-1:. 

In  England,  and  generally  in  the  United  States,  actions 
ex  contractu  are  the  only  suits  to  which  matters  of  set-off" 
may  be  pleaded,  and  they  must  be  actions  for  definite  ascer- 
tainable amounts.  Actions  sounding  in  damages,  such  as 
trespass,  trover,  etc.,  are  not  subject  to  the  defense  of  set- 
off, because  the  sums  recoverable  are  unliquidated;  and  ac- 
tions ex  contractu  for  unliquidated  damages  follow  the  same 
rule.^* 

§  473.  Its  applicability  to  negotiable  instrumeiits. —  The 
doctrine  of  set-off"  has  but  a  limited  application  to  negotiable 
paper,  it  being  a  distinguishing  characteristic  of  negotiable 
securities  that  when  they  have  passed  into  the  hands  of  third 
parties  for  value,  no  set-off  admissible  in  pleadings  between 
original  parties  is  available.  Between  the  original  parties, 
however,  or  parties  between  wdiom  there  is  a  privity  —  that 
is,  between  maker  and  payee,  drawer  and  acceptor,  indorser 

17  Daniel  on  Noffoliable  Instruments,    §   1292. 

18  2  Parsons  on  Notoi^  and  Bills,  616;  Vancleave  v.  Beach,  110  Ind.  2G0; 
Gordon  v.  Brown,  2  Johns.  150. 


§§  474,  47.J.      oBKKiATioN    HAS   i;i:kn   1)IS(iiak(;i:i).  *5i':J 

and  immediate  indorsee  —  a  set-off  may  be  pleaded  t<»  nego- 
tiablo  secnrities   as  avcH  as  to  any  other  kind.''"* 

§  474.  Purchaser  of  overdue  negotiable  instrument  not  sub- 
ject to  set-off  that  would  apply  to  his  transferrer. —  The  rule 
that  a  party  taking-  an  overdue  bill  or  note  takes  it  subject 
to  the  ecpiities  to  which  the  transferrer  is  subject,  does  not 
extend  so  far  as  to  admit  set-offs  which  might  be  available 
against  the  trairsf error.  A  set-off  is  not  an  equity;  and  the 
general  rule  stated  is  (qualified  and  restricted  to  those  equities 
arising  out  of  the  bill  or  note  transaction  itself,^^  and  the 
transferee  is  not  subject  to  a  set-off  which  would  be  good 
against  the  transferrer,  arising  out  of  collateral  matters."^ 

This  is  the  English  rule  on  the  subject,  while  in  the 
United  States  there  is  a  conflict  of  decisions.  In  some  of 
the  States  the  English  rule,  excluding  set-offs  which  existed 
at  the  time  of  the  transfer  of  the  overdue  paper,  is  followed. 
In  others  such  set-offs  are  admitted."  But  it  seems  to  be 
the  uniform  ruling  everywhere,  that,  although  the  paper  be 
transferred  after  maturity,  no  set-offs  between  antecedent 
parties,  which  arose  after  the  transfer,  will  be  available 
against  the  indorsee.^^  In  some  of  the  States  this  question 
is  settled  by  express  statute  on  the  subject.  In  Xew  York, 
for  instance,  the  statute  admits  set-offs  existing  at  the  time 
of  transfer  of  the  overdue  note  or  bill.^* 

The  right  to  plead  an  equitable  set-off  is  a  personal  privi- 
lege of  the  principal,  and  does  not  extend  to  the  surety, 
unless  the  defense  amounts  to  total  want  or  failure  of  con- 
sideration.^' 

§  475.  What  discharges  a  surety;  general  principles  of 
surety's  liability —  The  acceptor  of  a  bill  and  the  maker  of  a 
note,  when  the  acceptance  is  made  or  note  executed  upon  a 

19  Daniel  on  Xp<?otialjle  Instruments,  §  14.35. 

20  Barnes  v.  McMulIins,  78  Mo.  2C0;  Drexler  v.  Smith,  30  Fed.  958. 
2iChitty  on  Bills   [*220],  251;   Story   on  Bills,  §   220;   2  Parsons  on 

Notes  and  Bills,  603.  604. 

22  See   cases  cited   in    Daniel   on  Negotiable  Instruments,   §    1437. 

23  Davis  V.  Miller,  14  T.ratt.  8. 

24  Edwards  on  Bills.  260. 

25  Osborn  v.  Bryce,  23  Fed.  177. 


324  DEFENSES.  §  47G. 

valualile  consideration,  are  iiiidonbtcdly  principals  as  to  all 
t.Uo  parties  thereto.  And  the  drawer  ot"  such  a  bill,  and  the 
indorsers  of  such  a  hill  or  note,  are  sureties  of  the  acceptor 
or  maker  to  the  hokler."''  But  though  all  the  parties  to 
such  a  bill  are  sureties  of  the  acceptor,  they  arc  not  as  be- 
tween themselves  cosureties,  liable  for  contribution  to  each 
other  in  tlie  event  that  anyone  should  pay  the  amount  for 
the  acceptor;  but  each  prior  party  is  a  principal  as  between 
himself  and  each  subsequent  party.  Thus,  if  the  bill  were 
payable  to  the  drawer's  order,  and  accepted,  and  then  in- 
dorsed by  the  drawer  and  two  subsequent  indorsers  succes- 
sively, to  the  holder,  the  drawer  and  indorsers  would  be 
sureties  of  the  acceptor  to  the  holder.  But  as  between  the 
holder  and  the  drawer,  the  drawer  is  principal  debtor,  and 
the  indorsers  sureties.  As  between  the  holder  and  second 
indorser,  the  second  indorser  is  principal,  and  the  third 
indorser  is  surety.^ 

The  fact  that  the  liability  of  the  drawer  or  indorser  is 
fixed  by  due  demand  and  notice,  does  not  alter  their  relation 
as  sureties  of  the  debt;  it  simply  fixes  their  liability  as  sure- 
ties for  its  payment,  provided  nothing  is  done  by  the  credi- 
tor to  exonerate  them.  This  view  is  established  by  great 
weight  of  authority,  and  may  be  regarded  as  settled.^^ 

§  476.  Whatever  discharges  acceptor  or  maker  discharges 
drawer  and  indorsers. —  As  a  general  rule,  whatever  dis- 
charges the  acceptor  of  a  bill  or  maker  of  a  note  discharges 
the  drawer  and  indorsers  who  are  sureties,  for  the  contract 
which  they  undertook  to  assure  thus  passes  out  of  existence 
by  the  act  of  the  beneficiary.  He  cannot  discharge  the 
party  primarily  bound  for  the  performance  of  an  engage- 
ment, and  then  insist  that  another  shall  stand  responsible 
for  its  performance.  Besides,  the  drawer  or  indorser,  on 
making  payment  for  the  maker  or  acceptor,  Avould  be  en- 

20  Wallace  v.  McConnell,  13  Pet.  13G;  Guiinis  v.  Weigley,  114  Pa.  St. 
194;  Blair  v.  Bank  of  Tennessee,  11  Humplir.  84. 

27Newcomb  v.  Raynor,  21  Wend.  108;  Byles  on  Billa   [*236],  379. 

28  Gould  V.  Robson,  8  East,  576;  Bank  of  United  States  v.  Hatch,  6 
Pet.  250;  Hubbly  v.  Brown,  16  Johns.  70. 


§  477.  OBLIGATI(3X    HAS    BEEN    DISCli  A  i;( .  Kl>.  .']2.J 

titled  to  the  holder's  remedies  against  him;  and  if  the  iiolder 
has  discharged  him  from  Ids  obligation,  the  drawer  or  in- 
dorser  would  be  remediless  and  have  no  resort  for  reim- 
bursement.^" And  wliatever  (.liscliargcs  a  j)ri()r  indorscr  iHs- 
charges  all  subse([uent  indorsers,  for  the  reason  tliat  ho  .stood 
between  them  and  the  holder,  and  on  making  payment  eacli 
one  could  have  iiad  recourse  again>t  him,  but  from  which  his 
discharge  precludes  them.^^  It  follows  from  the  same  reason- 
ing that  discharge  of  a  subsc([uent  indorser  can  discharge 
no  ])rior  party;  for  such  subsequent  indorser  could,  under 
no  circumstances,  be  liable  to  such  ])rior  ])arty.^' 

ij  477.  Misrepresentation,  duress,  diversion,  alteration,  or 
tender  will  discharge  surety. —  If  the  surety  has  been  in- 
duced to  become  a  party  to  the  instrument  through  any  mis- 
representation or  fraudulent  concealment  of  a  material  fact, 
his  contract  is  void  from  the  beginning  as  between  himself 
and  all  parties  privy  to  such  misrepresentation  or  conceal- 
ment.^' If  the  principal  signed  under  duress,  the  holder 
guilty  of  the  duress  could  not  enforce  the  obligation  against 
a  surety. ^^  If  the  payee  is  neither  cognizant  of,  nor  partici- 
pates in  the  fraud,  he  is  not  affected  by  it.''^  Any  fraud 
which  deceives  the  surety  after  he  has  become  a  party  re- 
leases him.^^  And  where  a  bill  is  drawn  or  accepted,  or  a 
note  made  or  indorsed  for  acconnnodation,  with  an  agree- 
ment that  it  shall  be  used  for  a  particular  ])urpose,  anv  diver- 
sion in  its  use  operates  a  discharge  of  the  accommodation 
party  as  to  all  other  })arties  who  have  knowledge  of  such 
diversion.^'"'     The  subject   of  alteration   is  elsewhere   fully 

29Gunni.s  v.  Weigley.  114  Pa.  St.  194;  Shutts  v.  Fingar,  100  X.  Y. 
539. 

30  Newconib  v.  Raynor,  21  Wend.  108;  Shutts  v.  Fingar,  100  X.  Y.  .539. 

31  Ikink  of  United  States  v.  Hatch,  G  Pet.  250;  White  v.  Hopkins.  3 
Watts  &  S.  99;   Lynch  v.  Reynolds,  IG  Johns.  41. 

3-']MeIick  V.  First  Xat.  Bank,  .52  Iowa.  94;  Solser  v.  Brock.  .>  (lliio 
St.  302;  Xorth  British  Ins.  Co.  v.  Lloyd,  10  Exch.  523. 

33  GrifTith  v.  Sitgreaves.  90  Pa.  St.  101. 

34  Anderson  v.  Warne,  71  111.  20. 
3r.  Harris  v.  Brooks.  21  Pick.  122. 

36  Dewey  v.  Cochraji,  4  .loiic-.  1S4:    1    I';ir>oiis  on  Xotos  and  Bills.  236. 


3iO  DEFEXJ^ES.  §  478. 

treated."  And,  as  lias  been  seen,  a  tender  of  payment  made 
at  tlio  maturity  of  the  instrument  discharges  the  drawer  and 
indorsers.^^ 

§  478.  Parting  with  security  discharges  surety. —  Upon 
making  payment  of  the  debt,  the  surety  is  undoubtedly  en- 
titled to  all  the  rights,  remedies,  and  securities  which  the 
creditor  could  have  enforced.^"  And  while  the  creditor  may 
not  only  abstain  from  active  measures,  but  may  even  relin- 
quish steps  already  commenced,*"  he  must  do  nothing  which 
can  impair  the  rights  and  remedies  of  the  surety.  There- 
fore, if  any  collateral  security  which  the  creditor  held  be 
released,  or  a  judgment  lien  given  up,  or  a  levy  withdrawn, 
the  surety  is  discharged.*^  But  the  withdrawal  of  an  exe- 
cution from  the  hands  of  the  sheriff  before  a  levy  will  not 
discharge  the  surety.  iSTor  Avill  an  omission  to  revive  a 
judgment,  by  means  of  which  tbe  lien  and  the  land  are  lost; 
nor  discontinuance  of  steps  to  foreclose  a  mortgage.*"  But 
neglect  to  record  a  mortgage,  whereby  its  value  is  lost, 
would  discharge  the  surety,  and  this  even  though  the  original 
mortgage  would  have  been  worthless,  if  recorded,  by  reason 
of  prior  liens.*^ 

But  the  surety  will  not  be  discharged  in  any  case  where 
it  can  be  clearly  proved  that  the  act  of  the  creditor  has 
worked  no  real  injury.  And  he  is  discharged  only  to  the 
extent  that  he  would  be  injured  if  held  bound.**    Thus  with- 

37An<e,  §§  427-443. 

98  Ante,  §  464. 

•"'JTreanor  v.  Yingliiig,  ,37  Md.  491;  King  v.  Baldwin,  2  Johns.  Ch.  317; 
Humphrey  v.  Ilitt,  G  Gratt.  509. 

40  Bellows  V.  Lovell,  5  Pick.  307;  Lawson  v.  Sayder,  1  Md.  171;  Mont- 
pelier  Bank  v.  Dixon,  4  Vt.  399. 

4lShutt.s  V.  Fingar,  100  N.  Y.  ,539;  Allen  v.  0"Donald,  23  Fed.  573; 
Commonwealth  v.  Haas,  16  Serg.  &  R.  2,52;  Mayhew  v.  Boyd,  5  Md.  102. 

42  Lenox  v.  Trout,  3  WTieat.  520;  Humphrey  v.  Hitt,  6  Gratt.  ,509; 
Farmers'  Bank  v.  Reynolds,  13  Ohio,  84;  Butler  v.  Gambs,  1  Mo.  App. 
466. 

43  Barr  v.  Boyer,  2  Xebr.  265;  Atlanta  Xat.  Bank  v.  Douglass,  51  Ga. 
205. 

44  Payne  v.  Commercial  Bank,  G  Smedes  &  M.  24;  Ncff's  Appeal.  9 
Watts  &  B.  36. 


§§  47'J,  480.        OBLICJATION     HAS    BEEN     U1.SC11A.UGED,  327 

drawal  of  u  levy  on  property  only  entitles  the  snrety  to  a 
credit  for  tlic  value  of  the  i)ro])erty  levied  cm.*-' 

§  479.  Extension  of  time  will  discharge  surety. —  'I'lie  prin- 
ciple that  whatever  discharges  the  principal  discharges  the 
surety  is  of  extended  application,  and  it  is  operative  when- 
ever anything  is  done  which  relaxes  the  terms  of  the  exact 
legal  contract  by  which  the  principal  is  bound,  or  in  anywise 
lessens,  hnpairs,  or  delays  the  remedies  which  the  creditor 
may  resort  to  for  its  assurance  or  enforcement.  For,  when- 
over  the  creditor  relaxes  his  hold  upon  the  principal  debtor, 
he  impairs  the  hold  upon  him  which  the  surety  would  ac- 
quire by  substitution  in  his  place  on  making  payment;  and 
good  faith  and  fair  dealing  require  that  the  surety  should 
not  be  exposed  to  the  injuries  which  might  thus  be  inflicted 
upon  him."*'^  In  the  immense  majority  of  cases  the  act  done 
does  not  actually  damage  the  surety  a  shilling,  yet  the  doc- 
trine is  so  firndy  established  that  only  legislative  enactment 
can  change  it.^^ 

Extension  of  time  for  payment  is  the  most  frequent  form 
in  whicli  the  creditor  so  deals  with  the  principal  as  to  dis- 
charge the  surety;  and  w^henever  such  indulgence  is  granted 
in  pursuance  of  a  binding  legal  contract,  the  surety  is  at 
once  released  from  his  obligations.^'*  And  the  same  effect 
follows  (the  discharge  of  the  surety)  if  time  is  given  to  one 
of  the  joint  makers  of  a  note  of  which  the  surety  is  m- 
dorser.^^  If  the  creditor  takes  a  time  draft,  or  a  renewal 
note  from  the  principal,  the  presimiption  is  that  right  of 
action  is  suspended,  and  time  of  payment  extended  to  its 
maturity,  and  an  indorser  of  the  original  bill  or  note  is 
thereby  presumptively  discharged. '^^ 

^  480.  Elements  in  indulgence  necessary  to  discharge  surety. 
—  The  folloAring  elements  or  circumstances  must  unite  in 

'*■'  Ward  V.  Vass.  7  Loigh,   135. 

■»«  Daniel  on  Xe«;otiable  Instruments,  S  1312:   Thompson  on  Bills.  3P0. 
47  Swire  v.  Redman,  1  Q.  B.  Div.  530. 

48Siebeneck  v.  Anchor  Sav.  Bank.  Ill  Pa.  St.  1>>7;  Parmclee  v.  Wil- 
liams, 72  Ga.  43;  Shutts  v.  Fingar.  100  X.  Y.  .")30. 
49Stor}'  on  Notes,  §  414. 
fif'Poraeroy  v.  Tanner,  70  X.  Y.  547;   Buck  v.  Smiley,  (i4  Ind.  431. 


32S  DEFENSES. 


4S1. 


order  to  constitute  an  indulgence  which  will  discharge  the 
surety :  (1)  A  valid  consideration,  for  without  it  the  promise 
would  not  be  binding.  (2)  A  promise  or  agTeement  to  in- 
dulge, for  without  it  the  hands  of  the  creditor  are  not  tied,  al- 
though he  may  have  received  collateral  security  for  the  debt. 
(3)  The  promise  must  not  be  altogether  indefinite,  for  an  in- 
definite promise  of  forbearance  is  void  and  nugatory,  since  it 
might  be  for  an  hour,  which  would  be  of  no  advantage  to  the 
debtor.  (4)  The  indulgence  must  be  without  the  surety's  as- 
sent, for  if  he  assents  he  is  a  party  to  it.  (5)  The  indulgence 
must  be  without  reservation  of  remedy  against  the  surety, 
for  that  would  reserve  the  surety's  recourse  on  his  principal. 
(6)  The  agreement  must  be  with  the  principal,  and  not  with  a 
stranger.  ^^ 

SECTION  V. 


STATUTE    OF    LIMITATIONS. 


§  481.  Part  payment  by  joint  maker,  joint  and  several 
maker,  or  cosurety. — In  the  chapter  on  "Actions,"  the  sub- 
ject of  the  statute  of  limitations,  with  special  reference  to 
the  obligation  of  the  principal  debtor,  was  disposed  of.'^^ 
The  problems  presented  when  only  one  debtor  is  involved 
are  not  difiicult  of  solution,  whether  the  answer  to  the  plea 
of  the  statutory  bar  is  a  new  promise  or  a  partial  payment; 
but  when  the  new  promise  or  partial  payment  was  made  by 
one  of  two  or  more  joint  or  joint  and  several  makers  or 
by  a  cosurety,  and  it  is  sought  to  hold  a  party  other  than 
the  new  promisor  or  the  one  making  the  partial  payment, 
the  questions  presented  are  much  more  complex.  There 
are  many  authorities  which  sustain  the  view  that  the  statu- 
tory bar  is  removed  upon  the  principle  of  mutual  agency; 


.53 


•'■'1  Daniel  on  Xegotiable  Instruments,   §   1315. 

f;2See  ante,  §§  414,  415. 

eswhiteomb  v.  Whiting,  2  Doug.  G52;  Sheply  v.  Waterhouse,  22  Me. 
497;  Woonsocket  Inst,  for  Sav.  v.  Ballou,  16  R.  I.  351,  16  Atl.  144; 
Elliott  V.  Nichols,  7  Gill,  85;  Schindel  v.  Gates,  46  Md.  604,  24  Am.  Rep. 
526;  Turner  v.  Ross,  1  R.  I.  88;  Perkins  v.  Barstow,  6  R.  I.  505;  Car- 
penter V.  McLaughlin,  12  R.  T.  270.  34  Am.  Rep.  63S;  Joslyn  v.  S^mith, 
13  Vt.  353;  Bissell  v.  Adams,  35  Conn.  299. 


§  482.  STATriK     OF     LIMITATIOXS.  Ij2Q 

l)ut  the  cases  to  the  coiitrnrv  are  almost,  if  not  quite,  as 
numerous.""*"'  The  lictter  view,  upon  sound  principle,  seems 
to  be  that  if  the  ohli^ation  be  joint,  the  ])ayment  will  extend 
the  statutory  linatation,  but  if  it  be  joint  :ind  several,  it 
will  not. 

If  one  of  two  or  more  sureties  make  a  payment  upon  the 
obligation  before  it  is  barred  l)y  the  statute  of  limitations, 
such  surety  may  maintain  an  action  against  his  cosurety  or 
cosureties  for  contribution  after  the  bar  of  the  statute  as 
to  the  original  obligation  is  complete,  upon  tlu'  principle 
that  the  right  of  action  accrues  only  from  the  date  of  the 
payment  by  him.'"'^ 

§  482.  Part  payment  by  indorser  or  other  surety. —  A  part 
payment  made  by  an  indorser  does  not  prevent  the  bar  of 
the  statute  as  against  the  maker.^'''  On  the  other  hand,  a 
part  payment  by  the  maker  ^\ill  not  render  the  indorser 
liable,  but  a  payment  by  the  principal  will  bind  his  surety."' 
But  there  are  decisions  wdiich  hold  that  if  the  note  be  a 
joint  one  of  a  principal  and  surety,  a  part  payment  by  the 
principal  will  not  bind  the  surety.^^  A  payment  made  by  a 
surety  will  not  revive  a  note  already  barred  by  the  statute 
of  limitations  as  against  the  principal. ^^ 

54  Hallenbach  v.  Dickinson,  100  111.  427,  39  Am.  Rep.  47;  Shoemaker  v. 
Benedict,  11  N.  Y.  170,  62  Am.  Dec.  9.5,  note:  Bell  v.  Monison,  1  Pet. 
012;  Steele  v.  Soule,  20  Kan.  39;  Coleman  v.  Forbes,  22  Pa.  St.  1.56,  60 
Am.  Dec.  75;  Lowenthal  v.  Chappell,  8  Ala.  .S.jS. 

MMeCrady  v.  Jones,  44  S.  C.  406,  22  S.  E.  414;  Singleton  v.  Town- 
send,  45  Mo.  37;  2  Parsons  on  Notes  and  Bills,  254,  §  7;  Brandt  on 
Suretyship,  §  259,  and  notes. 

56  Byles  on  Bills  and  Notes,  358;  Hardinjr  v.  Edgecumbe,  28  L.  J.  Exrh. 
313;   Randolph  on  Commercial  Paper,  1629. 

57  Hunter  v.  Robertson,  30  Ga.  479;  Woodhouse  v.  Simmons,  73  N.  C. 
30;  Wyatt  v.  Hodson,  8  Bing.  309;  Hunt  v.  Bridgham,  2  Pick.  581 ;  Zent 
V.  Hart,  8  Pa.  St.  337;  Joselyn  v.  Smith.  13  Vt.  353;  Click  v.  Crist,  37 
Ohio  St.  388;   Smith   v.  Caldwell.   15  Rich.  305. 

58Coudy  V.  Cillam.  6  Rich.  2S ;  Faulkner  v.  Bailey,  123  ^Mass.  588; 
Burleigh  v.  Stott,  8  B.  &  C.  30. 

59  Jones  V.  Jones.  23  Ark.  212;  Randolph  on  Commercial  Paper.  1620. 
But  see  contra,  Whipple  v.  Stevens,  22  N.  H.  219. 


CHAPTER  XYJ. 

CONFLICT  OF  LAWS. 

§  483.  Importance  of  subject. —  'No  treatise,  however  brief, 
ou  the  subject  of  negotiable  instnimcnts,  and  especially  with, 
reference   to   actions  thereon   and   defenses   thereto,   would 
be  complete  without  a  general  summary  of  the  law  that  gov- 
erns and  controls.     Of  all  kinds  of  contracts,  there  is  none 
other    quite    so    perambulatory    as    negotiable    instruments. 
One  of  the  very  purposes  of  the  law  merchant  is  to  relieve 
all  negotiable  contracts  of  luggage,  and  thus,  so  to  speak, 
to  encourage   them  to   travel  without   regard  to   State   or 
national  boundary  lines.     It  not  infrequently  happens,  there- 
fore, that  a  negotiable  contract  is  made  in  one  jurisdiction, 
payable  in  another,  and  indorsed  in  still  another;  and  when 
it  is  considered  that  every  indorsement  is  a  new,  separate, 
and  independent  contract,  the  question  as  to  what  .law  gov- 
erns as  to  each  and  every  of  the  contracts  that  may  be  en- 
tered into  and  built  upon  the  original  obligation  becomes  a 
subject  of  peculiar  importance.  And  it  should  also  be  remem- 
bered that  each  one  of  the  United  States  is,  in  contemplation 
of  its  own  and  of  the  Federal  Constitution,  a  distinct  and 
independent  sovereignty,  with  its  own  peculiar  code  of  laws 
and  system   of  judicature.     And  while,   in  the   aggregate, 
they  compose  one  integral  confederacy,   which  is  itself  an 
independent  nation,  paramount  in  certain  respects  to  the 
States,  in  all  other  respects  the  States  retain  their  separate 
autonomies,  and  are  deemed  as  much  foreign  to  each  other 
as  if  not  in  anywise  associated  together.     The  regulation  of 
contracts  comes  peculiarly  within  the  province  of  the  States, 
and,  therefore,  contracts  between  citizens  of  the  different 
States,  while  they  may  be  enforced  by  process  in  the  Fed- 
eral courts,  nevertheless  are  to  be  construed  and  effectuated 
not  by  a  general  system  of  laws  which  overspread  the  whole 
country,  but  in  accordance  with  the  principles  of  interna- 


§  484.  CONFLICT    OF    I.AWS,  3^3 1 

tioiial  law  wliicli  govern  transactions  between  parties  of 
differciit  natiuii-. 

§  484.  General  principles —  The  loli(nving  may  be  re- 
garded as  establisbed: 

(1)  Every  contract  is  in  respect  to  its  formalities  and 
authentication  to  be  regulated  by  the  laws  of  the  State  or 
country  in  which  it  is  entered  into;  and  it  is  also  regulated 
by  the  laws  of  the  State  or  country  in  which  it  is  made,  in 
respect  to  its  nature,  validity,  interpretation,  and  effect, 
except  when  it  is  to  be  perfonned  in  another  State  or 
country. 

{•2)  When  a  contract  is  made  in  one  State  or  country 
to  be  performed  in  another  State  or  country,  it  is  to  be 
regulated  by  the  laws  of  the  place  of  performance,  without 
regard  to  the  place  at  which  it  was  written,  signed,  or 
dated,  in  respect  to  its  nature,  validity,  interpretation,  and 
effect. 

(3)  In  determining  the  place  where  a  contract  is  made, 
the  place  where  it  was  delivered,  as  consummating  the  bar- 
gain, controls;  and  not  the  place  where  it  was  written,  signed, 
or  dated. 

(4)  If  a  party  contracts  while  in  transitu,  and  with- 
out identity  with  any  other  place,  the  place  of  his  domicile 
is  deemed  the  place  of  the  contract. 

(5)  If  a  contract  be  illegal  and  void  at  the  place  where 
it  is  made,  it  is  void  everywhere. 

(6)  The  laws  of  a  State  or  country  have  no  extra- 
territorial force,  proprio  rigore;  and  are  only  executed  by 
other  States  and  countries  from  considerations  of  courtesy 
or  policy,  termed  the  comity  of  nations. 

(7)  The  laws  of  a  State  or  country  being  only  exe- 
cuted in  another  by  comity,  they  will  be  executed  only  so 
far  as  they  may  be  consistent  with  rtdigion,  good  morals. 
and  with  the  public  rights  and  interests  of  the  State  or 
country  in  which  the  remedy  is  sought. 

(8)  The  courts  of  a  State  or  country  cannot  take 
judicial  notice  of  the  laws  of  a  foreign  State  or  countrv; 


332  CONFLICT  OF  LAWS.  §§  485,  480. 

and  when  sneli  laws  are  songht  to  be  ai)i)lie(l,  they  must  be 
alleged  and  proved. 

(9)  The  law  of  the  place  where  snit  is  brought,  the 
lex  fori,  as  it  is  termed,  regulates  the  form  of  the  action 
and  the  nature  and  extent  of  the  remedy.^ 

§  485.  The  comity  of  nations. —  It  results  from  the  prin- 
ciple that  the  laws  of  a  country  have  no  binding  force  be- 
yond its  own  boundaries,  that  the  appeal  for  their  enforce- 
ment addresses  itself  entirely  to  the  comity  and  discretion 
of  the  forum  in  which  suit  is  brought.  That  comity  is 
freely  exercised  by  civilized  countries,  which  look  for  and 
receive  reciprocal  courtesies  from  other  nations;  and  the 
close  relations  of  the  several  States  of  the  Union  A\dth  each 
other,  the  family  likeness  of  their  institutions,  and  the  homo- 
geneity of  their  people,  are  powerful  incentives  to  the  ex- 
ercise between  them  of  a  comity  peculiarly  liberal  and  ex- 
pansive.^ But,  nevertheless,  a  State  must  be  just  before  it 
is  generous;  and  therefore  no  State  should  exercise  comity 
in  favor  of  contracts  which  violate  its  own  laws,  or  the  law 
of  nature,  or  the  law  of  God."  It  must  consult  sound  morals 
and  the  interests  and  public  policy  of  its  own  people,  and 
if  to  enforce  the  laws  of  another  State  or  country  would 
lead  to  their  infringement,  it  would  b^  treacherous  to  its 
own  duties  to  lend  aid  to  their  execution.^ 

SECTION  I. 

LEX    LOCI    CONTRACTUS. 

§  486.  To  what  extent  lex  loci  contractus  governs. —  The 

rule  is  of  general  acceptation  that  the  law  of  the  place  where 
the  contract  is  made  regulates  the  formalities  of  its  execu- 
tion and  authentication  and  the  consideration  necessary  to 

1  Daniel  on  Xoj^otiable  Instrumonts,  §  805. 
2Latlii-op  V.  Commercial   l^ank,  S  Dana,  118. 

3  Forbes  v.  Cochrane,  2  B.  &  C.  448. 

4  Armstrong,'  v.  Toler.  11  WTieat.  258;  Pearsall  v.  Dwiglit,  2  Mass.  84; 
Daniel  on  Nef^otiable  Instruments,  §  8G6. 


§  487.  LEX    LOCI    CONTRACTUS.  333 

its  validity;  and  also  regulates  its  interpretation,  nature, 
obligation,  and  effect.^  If  formally  executed  upon  a  legal 
consideration  there,  it  is  valid  everywhere;"'  and  if  defective 
there  in  either  respect,  it  is  invalid  everywhere."  By  inter- 
])retaTion  of  the  contract  is  meant  the  ascertainment  of  the 
true  meaning  and  intention  of  the  i)arties.  This  becomes 
a  matter  of  substantial  moment  when  it  is  remembered  tliat 
the  same  words  are  frequently  used  with  different  siguitica- 
tions  in  different  communities,  and  import  different  obliga- 
tions. It  follows  that  the  interpretations  placed  iipon  them 
nmst  be  according  to  the  signification  and  effect  attached 
to  them  in  the  State  or  country  in  which  the  contract  is 
made-  otherwise  the  intention  of  the  parties  will  be  de- 
feated, instead  of  effectuated.  Thus,  by  the  word  "  month  " 
is  sometimes  meant  a  lunar,  and  sometimes  a  calendar  month, 
and  if  it  were  used  in  a  contract  entered  into  in  a  foreign 
State  or  country,  evidence  would  be  admissible  to  show 
in  what  sense  the  term  was  there  understood.  So  the  word 
"  pounds  "  Avhen  employed  in  England  would  means  pounds 
sterling;  while  in  the  United  States  it  would  mean  ])ounds 
in  American  currency,  which  is  a  fourth  less  in  value. ^ 

§  487.  Nature  ajid  obligation  of  the  contract ;  meaning  of. — 
By  the  nature  of  the  contract  is  meant  those  qualities  which 
pertain  to  it.  Thus,  whether  it  be  joint  or  several,  or  joint 
and  several;  whether  absolute  or  conditional;  whether  of 
principal  or  surety;  whether  personal  or  real,  are  points 
which  concern  the  nature  of  the  contract,  and  are  to  be 
'governed  by  the  law  of  the  place  at  which  it  is  entered  into. 
This  is  well  illustrated  in  an  English  case,  where  suit  was 
brought  in  England  upon  a  bill  accepted  at  Leghorn,  where 
the  law  is,  that  if  the  acceptor  have  not  in  his  hands  suffi- 
cient funds  of  the  drawer,  and  the  drawer  then  fail,  the 


5  King  V.  Sarria.  69  N.  Y.  24;  Evans  v.  Anderson,  78  111.  558;  Ainien- 
diaz  V.  Sana,  40  Tex.  291. 

c  Andrews  v.  Pond,  1,3  Pet.  65;  Fant  v.  Miller.  17  Gratt.  47. 
7Pearsall  v.  Dwijrht,  2  Mass.  84;  Kanaka  v.  Taylor,  7  Ohio  St.  134. 
8  Daniel  on   Negotiable  Instruments,  §  871. 


334:  CONFLICT    OF    LAWS.  §  488- 

acceptance  is  thereupon  vacated.     It  was  held  that  the  law 
of  Leghorn  should  prevail.^ 

By  obligation  of  the  contract  is  meant  the  legal  existence 
or  nonexistence  of  a  promise  to  pay,  and  the  extent  thereof. 
For  instance,  if  by  the  law  of  the  country  where  the  contract 
is  made  the  legal  effect  is  to  hind  the  rem  {i.  c,  land  mort- 
gaged), and  not  to  create  a  personal  obligation,  the  law  of 
that  jurisdiction  will  govern.  Again,  the  question  whether 
or  not  the  promise  or  obligation  is  primary  or  secondary, 
absolute  or  conditional,  is  governed  by  the  hx  loci  contractus. 
Following  that  principle,  the  extent  and  character  of  the 
obligations  of  sureties,  indorsers,  and  guarantors  are  fixed 
and  determined.^" 

§  488.  What  constitutes  place  of  execution ;  presumptions. — 
The  place  where  a  contract  is  made  depends  not  upon  the 
place  where  it  is  written,  signed,  or  dated,  but  upon  the 
place  where  it  is  delivered  as  consummating  the  bargain.^^ 
Thus,  the  law  of  the  place  where  a  bill  or  note  is  written, 
signed,  or  dated  does  not  necessarily  control  it,  but  the  law 
of  the  place  where  it  is  delivered  from  drawer  or  maker 
to  payee,  or  from  indorser  to  indorsee.  A  note  drawn  and 
dated  in  Maryland,  but  dehvered  in  Xew  York,  in  payment 
of  goods  there  purchased,  or  money  loaned,  is  payable  in 
and  governed  by  the  laws  of  I^ew  York.^^  And  if  a  note 
be  dated  and  signed  in  blank  in  Virginia,  and  sent  to  Mary- 
land, and  there  filled  up  and  negotiated,  it  is  a  Maryland^ 
and  not  a  Virginia,  note.^^ 

It  should  be  further  observed  that  where  the  parties  ac- 
quiring a  bill  for  value,  and  in  the  usual  course  of  business, 
have  no  knowledge  that  it  was  not  issued  and  delivered  as 
a  subsisting  instrument  at  the  place  where  it  bears  date,  it 

9  Daniel  on  Negotiable  Instniments,  §  872;  Burrows  v.  Jemimo,  2  Stra. 
73.3. 

i'>  Daniel  on  Negotiable  Instruments,  §  873. 

11  Freese  v.  Brownell,  35  N.  .J.  L.  286;  Lawrence  v.  Bassett,  5  Allen, 
140. 

12  Cook  V.  Moffat,  5  How.  29.5;  Hyde  v.  Goodnow,  3  N.  Y.  26G. 

13  Fant  V.  Miller,  17  Gratt.  47. 


§§  489,  4'JO.  1.KX     LOCI    (•U.NTUACTL'S.  o.j5 

is  but  just  that  tlio}-  should  be  entitled  to  regard  its  osten- 
sible as  its  real  character,  and  should  at  least  not  be  per- 
mitted to  suffer  by  reason  of  the  after-discovered  fact  that 
it  was  not  there  delivered.^'*  In  the  absence  of  evidence  to 
the  contrary,  it  will  be  presumed  that  a  note  was  executed 
and  delivered  at  the  place  where  it  bears  date.^*^ 

§  489.  Lex  domicilise. —  After  all,  the  question  as  to  what 
law  governs  in  the  interpretation,  construction,  etc.,  is  one 
of  intention;  and  if  the  instrument  does  not  specify  the 
place  of  payment  or  execution,  the  domicile  of  the  maker  or 
acceptor  may  be  invoked  for  the  sole  purpose  of  ascertaining- 
the  intention  of  the  parties  as  to  the  place  of  execution. 
If  one  be  a  sojourner  in  a  State  or  country  other  than  his 
home  or  place  of  domicile,  and  the  instrument  does  not 
specify  the  place  of  performance,  the  law  presumes  that 
the  lex  domiciles  determines  the  loci  contractus.  In  other 
words,  that  the  contract  was  made  and  intended  to  be  per- 
formed at  the  place  of  residence  of  the  obligor,  and  that 
such  place,  presumably  being  the  place  where  the  contract 
was  made,  will  govern  in  the  construction  of  the  instrument, 
the  formalities  of  its  execution,  and  the  nature  and  char- 
acter of  the  obligation  entered  into.  As  has  been  indicated, 
however,  this  is  a  mere  presumption,  which  may  be  rebutted 
by  the  circumstances  attendant  upon  the  execution  of  the 
contract,  cr  by  the  nature  of  the  transaction  out  of  which 
the  contract  grew.  Thus,  if  it  were  a  debt  for  board  at  a 
hotel,  or  articles  of  personal  subsistence  or  necessity,  it 
would  be  payable  by  usage  before  the  sojourner  left  the 
place,  and  therefore  payable  there,  and  controlled  by  its 
laws.^*' 

§  490.  Lex  loci  solutionis ;  exception  to  rule. —  But  the 
law  of  the  place  where  the  contract  is  made  yields  in  certain 
respects  to  that  of  the  place  of  performance;  for  it  is  in 

14  1  Parsons  on  Notes  and  Bills,  ;j7 :  Quaker  City  Bank  v.  Sliowacre, 
26  W.  Va.  52;  Nat.  Bank  v.  Snioot.  1  JlacArth.  371. 

15  Parks  V.  Evans.  5  Del.  570. 

i*"' Daniel  on  Nejrotiable  Instruments,  §  876;  Wharton  on  Conflict  of 
Laws.  §§  414-416.  426. 


336  CONFLICT    OF    LAWS.  §  ^'-^l. 

view  of,  and  in  reference  to,  the  laws  of  the  place  of  per- 
foi-mance,  that  it  is  to  be  presumed  the  terms  of  the  con- 
tract were  selected,  and  its  stipulations  entered  into."  "  The 
general  principle  as  to  contracts  made  in  one  place  to  be 
performed  in  another,"  says  Chief  Justice  Taney,  "  is  well 
settled.  They  are  to  be  governed  by  the  law  of  the  place  of 
performance."  ^'^  Thus,  in  Massachusetts,  a  note  payable 
to  A.  or  order  at  any  or  either  bank  in  a  city,  is  negotiable; 
hut  if  such  a  note  were  made  in  Massachusetts,  and  were 
payable  in  Virginia,  it  would  not  be  negotiable,  because 
not  payable  at  a  particula**  bank,  as  the  Virginia  statute 
requires.^^  "Where  a  part  of  the  contract  is  to  be  performed 
in  one  country,  and  a  part  in  another,  each  part  is  to  be 
governed  by  the  law  of  the  place  where  it  is  performable.^^ 

And  whenever  it  is  alleged  that  a  bill  is  payable  by  the 
acceptor,  or  a  note  by  the  maker,  at  a  place  different  from 
that  at  which  such  acceptance  or  making  took  place,  it  is 
necessary  to  show  it,  either  by  the  express  language  of  the 
instrument  itself,  or  by  intendment  and  construction  of  law 
ansing  from  the  attendant  circumstances.  And  if  the  note 
be  dated  at  a  particular  place  and  payable  generally  —  that 
io,  without  designation  of  a  particular  place  —  the  law  at- 
taches to  it  the  presumption  that  it  is  to  be  paid  where 
niade.^^  So  it  is  to  be  presumed  that  an  acceptance  of  a 
bill,  naming  no  place  of  payment,  is  to  be  paid  where  made; 
and  the  address  of  the  drawee  generally  indicates  where  such 
place  of  acceptance  is.^ 

§491.  Lex  loci  rei  sitae;  further  exceptions. —  Of  course 
real  estate  is  controlled,  in  respect  to  the  validity  and  form 
of  the  conveyance,  by  the  lex  loci  rei  sitae  —  that  is,  by  the 

17  Andrews  v.  Pond,  13  Pet.  65;  Pierce  v.  Indseth,  106  U.  S.  .546; 
Shoe  &  Leather  Nat.  Bank  v.  Wood,  142  Mass.  567. 

18  Andrews  v.  Pond,  1.3  Pet.  65. 

19  Freeman's  Bank  v.  Ruckman,  16  Gratt.  126. 

20  Pomeroy  v.  Ainsworth,  22  Barb.  118;  Younj?  v.  Harris,  14  B.  Man. 
556. 

21  Wilson  V.  Lazier,  11  Gratt.  477;  Thompson  v.  Ketehum,  8  .Johns.  189, 

22  Todd  V.  Bank  of  Kentucky,  3  Bush,  626. 


§  492.  LEX    LOCI    CONTRACTUS.  337 

law  of  the  place  where  it  is  situated.  Bat  the  question  has 
been  much  litigated  in  the  United  States,  as  to  what  law 
applies  when  a  mortgage  is  given  as  security  for  a  loan,  and 
the  mortgage  is  in  one  State,  and  the  place  of  payment  of 
the  loan  in  another.  "  The  true  test  is,  was  the  mortgage 
merely  a  collateral  security,  the  money  being  employed  in 
another  State-  and  under  other  laws,  or  was  the  money 
employed  on  the  land  for  which  the  mortgage  was  given? 
If  the  former  be  the  case,  then  the  law  of  the  place  where 
the  money  wa's  actiuilly  used,  and  not  that  of  the  mortgage, 
applies."^  If  the  latter,  then  the  law  of  the  place  where 
the  mortgage  is  situate  must  prevail.'"''^  Where  money 
was  borrowed,  and  the  note  made  payable  in  Xew  York 
but  dated  in  Xebraska,  where  a  mortgage  to  secure  it  was 
executed  on  land,  the  mortgage  was  held  to  be  a  mere  in- 
cident of  the  loan,  and  the  transaction  being  usurious  by 
Xew  York  law,  it  was  held  void.""'  In  Xew  Jersey  the  court 
refused  to  enforce  a  contract  in  Xew  York  secured  by  a  Xew 
Jersey  mortgage  on  real  property  in  that  State,  the  contract 
being  opposed  to  the  policy  of  the  Xew  Jersey  statutes 
prohibiting  stock  gambling.^*" 

§  492.  By  what  law  liability  of  maker,  acceptor,  drawer,  and 
indorser  determined. —  The  liabilities  of  the  maker  and  ac- 
ceptor, respectively,  of  a  note  and  bill  of  exchange  are  con- 
trolled by  the  law  of  the  jdace  where  the  obligation  is  en- 
tered into.^'  The  contract  is  deemed  to  have  been  made 
with  reference  to  the  law  of  such  place,  and  hence  the  lex 
loci  contractus  will  control  the  obligation.  The  contract  of 
the  drawer  of  a  bill  or  of  the  indorser  of  any  negotiable 
contract  is  also  to  be  determined  and  intei-preted  by  the 
lex  loci  contractus  —  that  is  to  say,  by  the  law  of  the  place 

23  1)6  Wolf  V.  Johnson,  10  Wheat.  383;  Kennedy  v.  Knight,  21  V.'is. 
340;  Davis  v.  Clemson,  G  McLean,  G22. 

24  Wharton  on  Conflict  of  Laws,  S  olO;  Arnold  v.  Potter,  22  Iowa, 
194;  Cliapman  v.  Robinson,  0  Paipc,  627. 

25  Sands  v.  Smith,  1  Nebr.  lOS. 
2«Flapp  V.  Baldwin,  11  8tew.  210. 

27  Daniel  on  Negotiable  Jnstruments,  §§  895,  896. 

00 


338  CONFLICT    OF    LAWS.  §  492. 

where  the  bill  was  drawn  or  the  contract  indorsed.  Thus, 
if  a  merchant  in  j^ew  York  draw  a  bill  on  another  in  Kich- 
mond,  Virginia,  reqiiinng  him  to  pay  a  certain  amount  with- 
out specifying  any  place  of  payment,  the  drawee  will,  if  he 
accepts,  be  bound  to  pay  the  amount  in  Richmond,  that 
being  implied  by  the  address  of  the  bill  to  him  at  that  place. 
But  it  does  not  follow  that  the  drawer  would  be  himself 
bound  to  pay  the  amount  of  the  bill  in  Richmond  in  the 
event  of  dishonor  for  nonpayment  by  the  acceptor.^^  His 
undertaking  is  not  to  pay  it  in  Richmond  himself,  but  a 
guaranty  that  it  (the  bill)  shall  be  paid  there  by  the  drawee, 
and  a  further  undertaking  that  if  not  so  paid  by  the  drawee, 
he  will  pay  the  amount  in  Xew  York,  provided  the  bill  be 
duly  presented,  and  he  has  received  due  notice  of  its  dis- 
honor. In  other  words,  the  drawer  of  a  bill  does  not  bind 
himself  to  pay  it  specially  where  the  acceptor  is  im.pliedly 
or  expressly  called  on  to  pay  it;  but  his  contract  is  to  pay 
generally,  and  is  consequently  construed  to  be  a  contract 
to  pay  at  the  place  where  the  bill  is  drawn. ^^  The  same  prin- 
ciple, as  thus  illustrated,  is  equally  applicable  to  the  con- 
tract of  indorsement.  As  has  been  stated,  an  indorsement 
constitutes  a  wholly  new,  separate,  and  independent  obli- 
gation, and  as  such  the  party  that  enters  into  it  must  be 
taken  to  have  contracted  with  reference  to  the  law  of  the 
place  where  it  was  entered  into,  just  as  unequivocally  as  the 
maker  of  a  promissory  note  or  the  acceptor  of  a  bill  of  ex- 
change. This  doctrine,  that  the  drawer  and  indorser  are 
bound  according  to  the  law  of  the  place  of  drawing  or  in- 
dorsing, although  sustained  by  great  weight  of  opinion  and 
an  overwhelming  current  of  authorities,  has  not  escaped 
criticism  and  dissent.^" 

28  Daniel  on  Negotiable  Instruments,  §§  898,  899. 

20  Bank   of  United   States   v.   United.  States,   2   How.   711;   Freese   v. 
Brownell,  .35  K  J.  L.  286;  Everett  v.  Vendryes,  1!)  N.  Y.  436. 
30  See  Daniel  on  Negotiable  Instruments,  §§   899-902. 


§§  49.3,  494.  LEX   KOKi.  339 

SKfTIOX  ir. 

LEX    l-OUI. 

§  493.  General  principles. —  It  is  a  settled  principle  of  law 
tliat  the  rcnuMlics  lor  lircacli  of  any  contract  must  be  pur- 
sued according  to  tlic  law  of  the  place  where  suit  is  brought. 
Those  remedies  are  devised  by  the  State  in  consonance  with 
its  own  views  of  justice,  public,  policy,  and  convenience; 
and  comity  does  not  require  that  it  should  depart  from  the 
courses  of  procedure  which  it  a})plics  to  its  own  inhabit- 
ants, and  extend  greater  or  different  privileges  to  strangers.^^ 
The  foreigner  who  sues  must  take  the  law  as  he  finds  it.^^ 

This  doctrine  extends  to  the  determination  of  (1)  the 
parties  who  may  sue  and  be  sued;  (2)  the  time  within  which 
suit  may  be  brought;  (3)  the  form  of  action;  and  (4)  the 
nature,  eft'oct,  and  extent  of  the  remedy  applied. 

§  494.  Who  may  sue. —  Who  may  sue  is  generally  a  ques- 
tion of  the  remedy;  and  the  mere  designation  of  the  phiin- 
titf  is  always  made  by  reference  to  the  lex  fori.  And  as  a 
general  rule,  if  allowed  by  the  lex  fori,  an  assignee  may 
sue  in  his  own  name,  although  he  cannot  so  sue  at  the  place 
of  the  assignment.^"^  And  if  not  allowed  by  the  lex  fori,  he 
cannot  sue  in  his  own  name,  although  he  might  do  so  at 
the  place  of  assignment.''"*  lint  w^c  think  this  doctrine 
should  not  be  pushed  farther  than  to  indicate  the  mere  nomi- 
nal parties  to  the  suit  when  it  is  purely  a  question  of  remedy. 
Thus,  if  a  note  were  non-negotiable  in  Virginia,  and  could 
not  be  there  indorsed  or  assigned,  yet  if  negotiable  and  ac- 
tually indorsed  in  Kentucky,  so  as  to  completely  vest  title 
in  the  indorsee,  the  holder  would  then  have  an  absolute 
right   to   recover   the    amount,    and   the   lex   loci   contractus 


31  Bank  of  United  States  v.  Donally,  8  Pet.  372;  Scoville  v.  Carleld, 
14  Johns.  338;  Wharton  on  Conflict  of  Laws,  §  747. 

32  De  la  Vega  v.  Vianna,  1  B.  &  Ad.  284. 

3;5Foss  V.  Nuttinfr.  14  Gray,  484;  Wharton  on  Conflict  of  Laws,  S  4.")7. 
34  risk  V.  Brackett.  .32  Vt.  708;  Wharton  on  Conflict  of  Laws.  §  73."); 
2  Parsons  on  Notes  and  Bills,  368. 


340  CONFLICT   OF   LAWS.  §§  495, 496. 

ghoiild  govern. ^'^  So  if  by  the  law  of  the  place  of  transfer, 
an  executor  or  administrator  may  indorse  or  assign  a  note, 
so  as  to  vest  title  and  right  to  sue-  completely  in  his  trans- 
feree, the  latter  should  be  permitted  to  sue  anywhere.^'' 
This  is  due  to  a  liberal  comity.  But  the  authorities  pre- 
dondnate  in  nund)er  the  other  way.'" 

§  495.  Time  within  which  suit  may  be  brought The  time 

within  which  suit  may  be  brought  is  purely  a  question  of 
the  forum.  Thus  suit  may  be  brought  immediately  in  one 
State  by  attachment,  although  at  the  time  no  action  would 
lie  in  the  State  where  the  cause  of  action  arose. ^^  And  in 
like  manner  the  statute  of  limitations  of  the  forum  pre- 
vails; and  no  suit  can  be  maintained  if  it  be  barred  there, 
although  by  the  law  of  the  contract  there  was  no  limitation, 
or  a  less  restricted  limitation.^^  And  suit  may  be  main- 
tained where  the  limitation  of  the  lex  fori  has  not  attached, 
although  by  the  lex  loci  contrxicfus  action  has  been  formally 
barred.^^  This  doctrine  rests  upon  the  ground  that  the  time 
of  suit  is  purely  a  matter  for  local  municipal  regulation. 
It  may  be  different  in  cases  where  the  right,  in  contradis- 
tinction to  the  remedy,  is  held  by  foreign  law  to  be  ex- 
tinguished. Such  extinction  might  operate  by  comity 
everywhere. ^^ 

§  496.  Form  of  action,  remedy,  and  questions  of  evidence. — 
The  necessity  of  selecting  the  form  of  action  according  to 
the  law  of  the  forum  has  been  well  illustrated  in  the 
United  States  in  a  number  of  cases  where  the  instrument 

35  Lee  V.  Selleck,  33  N.  Y.  G15;  Story  on  Bills,  §  173;  Trimbey  v.  Vig- 
mer,  1  Bing.  N.  C.  159. 

so  Harper  v.  Butler,  2  Pet.  230;  Owen  v.  Moody,  29  Miss.  79;  Bar- 
rett V.  Barrett,  8  Greenl.  353. 

S7  Goodwin  v.  Jones,  3  Mass.  514;  Thompson  v.  Wilson,  2  N.  H.  291; 
Bteama  v.  Burnham,  5  Greenl.  261. 

38  Clark  V.  Conner,  2  Strobh.  346;   1  Rob.  Pr.  317. 

39  Mineral  Point  R.  Co.  v.  Barron,  83  111.  307;  Nicolls  v.  Rodgers,  2 
Paine  C.  C.  437 ;  Jones  v.  Hook,  2  Rand.  303 ;  British  Linen  Co.  v.  Drvmi- 
mond,  10  B.  &  C.  903. 

40  Power  V.  Hathaway,  43  Barb.  214;  Bulger  v.  Roche,  11  Pick.  36. 

41  Williams  v.  Jones,  13  East,  439. 


§  496.  L^x   i-oKi.  341 

sued  upon  was  deemed  a  specialty  where  made,  and  a  sim- 
ple contract  where  the  suit  was  brought,  or  vke  versa. 
Thus,  in  some  of  the  States  a  scroll  attached  to  the  prom- 
isor's name  is  the  same  as  a  common-law  seal;  and  cove- 
nant or  debt  would  be  the  proper  remedy  in  the  State  where 
the  i)romise  was  made,  assumpsit  not  lying  on  a  sealed  in- 
strument. And,  moreover,  by  the  local  law  the  defend- 
ant could  not  i)lead  want  of  consideration,  because  of  the 
instrument  being  sealed.  Dut  if  >uit  were  brought  in  a  State 
where  a  scroll  is  not  recognized  as  a  seal,  it  has  been  re- 
peatedly held,  that  assumpsit  would  be  the  proper  remedy, 
and  that  want  of  consideration  might  be  pleaded."*^  And 
the  converse  has  been  also  held,  that  although  where  made 
the  instrument  might  be  a  simple  promissory  note,  yet  if 
•where  suit  was  brought  it  was  regarded  as  a  specialty,  the 
appropriate  action  of  debt  or  covenant  shoidd  be  brought^ 
and  the  sanctity  attached  to  seals  would  be  imputed  to  it.^* 
At  one  time  it  was  held  that  the  extent  of  the  remedy  was 
to  be  determined  by  the  law  of  the  place  of  contract,  and 
where  suit  was  brought  in  England  upon  a  French  contract, 
upon  which  by  the  laws  of  France  no  arrest  could  be  made, 
it  was  held  that  the  defendant  could  not  in  Englaiul  be 
held  to  bail;"*"*  but  the  contrary  doctrine  is  now  well  settled. 
Questions  of  evidence  appertain  to  the  remedy,  and  con- 
sequently are  controlled  by  the  law-  of  the  forum.  "AVhother 
a  witness  is  competent  or  not;  whether  a  certain  matter 
requires  to  be  proved  by  writing  or  not;  wdiether  certain 
evidence  proves  a  certain  fact  or  not  ^  this  is  to  be  deter- 
mined by  the  law  of  the  country  where  the  question  arises, 
wdiere  the  remedy  is  sought  to  be  enforced,  and  where  the 
court  sits  to  enforce  it,"  is  the  language  of  Lord  Brougham.'*'* 
Jt  folloAvs  that  the  lex  fori  undoubtedly  applies  to  the  C(uu- 

42  Bank  of  United  States  v.  Donally,  8  Pet.  361 ;  Le  Roy  v.  Beard,  8 
How.  451 ;  Warren  v.  Lynch,  5  Johns.  239. 

43  Thrasher  v.  Everhart,  3  Gill  &  J.  319. 

+*De  la  Vof^a  v.  Manna,  1  B.  &  C.  284;  Peck  v.  Hozier,  14  Johns.  346; 
Hindley  v.  ^Marean,  3  !Mason.  90. 

«Bain  v.  ■\\Tiitehavon.  etc.,  R,  Co..  3  II.  L.  Cas.  1;  Wharton  on  Con- 
flict of  Laws,  §  768;  f^tory  on  Conllitt  of  Laws,  §  63.">. 


342  CONFLICT    OF   LAWS.  §§  41)7, 4D8. 

petency  and  credibility  of  witnesses,  but  not  as  to  the  num- 
ber of  attesting  witnesses  necessary  to  the  validity  of  a 
writing.*^ 

§  497.  Whether  party  is  bona  fide  purchaser  for  value. —  So 
the  eifoct  of  the  transaction  in  lixing  the  relations  of  the 
parties  is,  as  between  them,  determined  by  the  lex  loci  con- 
tractus. Thus,  if  by  the  lex  loci  contractus  the  purchaser 
acquires  the  note  as  a  bona  fide  holder,  not  subject  to  the 
defense  of  a  ])rior  payment,  such  payment  cannot  be 
pleaded,  although  the  lex  fori  would  permit  it."*^  And 
whether  or  not  the  proprietor  of  the  bill  or  note  is  a  bona  fide 
holder,  is .  to  be  determined  by  the  lex  loci  contractus  — 
that  is,  the  place  of  payment."*"*  The  mode  and  measure  of 
recovery  would,    however,   seem   to   be   a   question   of   the 

§  498.  In  respect  to  set-off,  it  is  laid  down  by  text 
writers,  and  by  the  courts  of  coimnon  law,  that  a  set-ofp  to 
any  action  allowed  by  the  local  law  is  to  be  treated  as  a  part 
of  the  remedy;  and  that,  therefore,  it  is  admissible  in  claims 
between  persons  belonging  to  different  States  or  countries, 
although  it  may  not  be  admissible  by  the  law  of  the  country 
where  the  debt  which  is  sued  was  contracted.^°  The  same 
principle  applies  to  the  mode  of  attacking  consideration. 
When  the  lex  fori  allows  a  plea  of  want  of  consideration 
in  a  suit  on  an  obligation,  which  by  the  lex  loci  contractus 
was  sealed,  and  to  which  by  such  latter  law  no  such  plea 
could  be  offered,  the  lex  fori  controls.^^  So  as  to  other 
legal  and  equitable  defenses,  where  the  very  contract  itself 
does  not  exclude  them,  they  are  to  be  controlled  by  the  lex 

46  Wharton  on  Conflict  of  Laws,  §  769. 

47  Harrison  v.  Edwards,   12  Vt.  651. 

48  Allen  V.  Bratton,  47  Miss.  129;  WoodrufT  v.  Hill,  116  Mass.  310. 

49  Woodruff  V.  Hill,  116  Mass.  .310;  2  Ames  on  Bills  and  Notes,  306. 

60  Mineral  Point  R.  Co.  v.  Barron,  83  111.  366;  Gibbs  v.  Howard,  2 
N.  H.  296. 

61  Wharton  on  Conflict  of  Laws,  §  788. 


§§  VJ'J,  5U0.  Li-^     I'OUI.  o4:o 

fori.^^  Statutes  providing  certain  exemptions  from  levy  and 
sale  upon  execution  atlect  the  remedy,  and  those  of  the 
forum  prevail.'"' 

i<  499.  The  courts  can  take  no  judicial  notice  of  the  laws 
of  another  country. —  Wlien  rtdicd  upon,  they  must  be 
proved  as  facts,  and  (.thenvisc  it  will  be  presumed  that  they 
are  the  same  as  tlic  hiws  of  the  fonini  in  which  suit  is 
brought;^"*  or  what  is  tlie  same  in  etlect,  when  the  laws  of 
the  foreign  country  are  not  put  in  proof  as  facts,  the  court 
will  apply  to  the  transaction  in  suit  the  laws  of  the  forum. 
Thus  the  law  as  to  the  rate  of  damages  will  be  presumed  to 
be  the  same  where  the  bill  is  drawn  in  one  country,  and  is 
sued  on  in  another ;'^^  so  it  will  be  presumed,  where  the  law 
of  the  forum  authorizes  an  indorsee  to  sue  before  exhaust- 
ing recourse  against  the  maker,  that  the  law  of  the  place 
of  the  contract  is  likewise  ;''^  and  so,  where  by  the  law  of 
the  forum  a  party  signing  in  a  certain  way  is  regarded  as  an 
indorser,  the  foreign  law  will  be  presumed  to  be  likewise.^'^ 
But  where  the  question  is  one  relating  to  the  law  merchant, 
which  is  of  general  application,  as,  for  instance,  the  num- 
ber of  days  of  grace,  it  would  be  presumed  that  they  were 
fixed  by  the  law  merchant,  that  is,  that  three  days  of  grace 
were  allowed  —  the  law  merchant  being  regarded  as  part  of 
the  coimnon  law.^^  Bonds  and  coupons  in  form  negotiable 
according  to  the  law  merchant  as  now  recognized  would  be 
presumed  in  one  State  to  be  negotiable  in  another. ^^ 

§  500.  What  law  governs  as  to  presentment,  protest,  and 
notice  of  dishonor. —  In  order  to  charge  the  drawer  or  in- 
dorser, the  holder  must  exercise  due  diligence  in  presenting 

62  Bliss  V.  Houghton,  13  N.  H.  126. 
.''3  Mineral  Point  R.  Co.  v.  Barron,  83  111.  30C. 

o-lFoulke  V.  Fleming,  13  Md.  392;  Hunt  v.  Johnson,  44  N.  Y.  27; 
Whidden  v.  Seelye,  40  Me.  247. 

M  Kuonzi  V.  Elvers,  14  La.  Ann.  301. 

■'"'G  Bean  v.  Briggs,  4  Iowa,  467. 

fiTIOaniol  on  Negotiable  Instruments.  §§  891,  895. 

08  Lucas  V.  Ladew,  2S  :Mo.  342. 

r.9  Tyrell  v.  Cairo  &   St.  L.  R.  Co.,  7  Mo.  App.  204. 


344  CONFLICT    OF    LAWS.  §  500. 

the  bill  to  the  drawee,  or  acceptor,  and  the  note  to  the 
maker;  and  as  the  acts  necessary  to  coustitnte  a  due  present- 
ment are  to  be  done  at  the  place,  upon  which  the  bill  is 
drawn,  or  at  which  the  bill  or  note  is  payable,  they  must 
be  governed  by  the  law  of  the  place  upon  which  it  is  drawn, 
or  at  which  it  is  payable,  as  the  case  may  be.  Accordingly, 
the  question  whether  or  not  the  bill  should  have  grace 
would  be  determined  by  the  law  of  the  place  of  payment; 
and  also,  if  allowable,  in  how  many  days  grace  should  con- 
sist. In  France  no  grace  is  allowable,  while  in  England  and 
the  United  States  it  is  generally  three  days.  But  it  ranges 
in  different  places  from  three  to  thirty  days,  and  in  each 
case  the  law  of  the  particular  place  would  determine.*''^ 

AVhen  a  foreign  bill  is  dishonored,  it  is  necessary  that  it 
should  be  protested,  and  the  protest  should  be  made  at  the 
time,  in  the  manner,  and  by  the  persons  prescribed  in  the 
place  where  the  bill  is  refused  acceptance  or  payment,  as 
the  case  may  be.^^ 

In  respect  to  notice,  it  has  been  distinguished  from  the 
presentment  and  protest  in  an  often  quoted  American  case,^^ 
in  which  it  is  held  that  it  must  conform  to  the  law  of  the 
place  where  the  drawing  or  indorsement  occurs,  in  order 
to  charge  the  drawer  or  any  particular  indorser,  on  the 
ground  that  the  nature  and  extent  of  the  liabilities  of  the 
drawer  or  indorser  are  to  be  determined  according  to  the 
law  of  the  place  where  the  bill  is  drawn  or  indorsement 
made,  and  that  the  mode  and  time  of  notice  constitute  an 
implied  condition  of  the  contract.*^^ 

60  Bank  of  Washington  v.  Triplett,  1  Pet.  25;  Aymar  v.  Sheldon,  12 
Wend.  439;  Jewell  v.  Wright,  30  N.  Y.  264. 

61  Daniel  on  Negotiable  Instruments,  §  909. 

62  Aymar  v.  Sheldon,  12  Wend.  439. 

63  Lee  V.  Selleck,  33  N.  Y.  815;  Williams  v.  Putnam,  14  N.  H.  543; 
Story  on  Bills,  §  285. 


APPENDIX. 

1345] 


APPENDIX 


THE  NEGOTIABLE  INSTRUMENTS  LAW. 

Mr.  Daniel,  in  the  year  1876,  concluded  the  first  edition  of  his  work 
on  "Negotiable  Instruments"  with  the  following  expression  of  hope 
for  a  uniform  system  of  commercial  law  throughout  the  country: 
"  '  We  will  never  immolate  truth,  justice,  and  the  law  because  a  State 
tribunal  has  erected  the  altar  and  decreed  the  sacrifice.'*  And  for  the 
facilitation  of  trade,  and  the  fair  understanding  of  mercantile  nego- 
tiations among  all  mercantile  men,  it  is  to  be  hoped  that  the  day  is 
not  far  distant  when  it  maj-  be  truly  said  ( in  the  language  of  Cicero, 
approvingly  quoted  by  Mansfield  and  Story),  respecting  the  law  of  our 
subject,  wherever  industry  turns  a  wheel  or  commerce  sets  a  sail. 
'  iVon  erit  alia  lex  Roma:,  alia  Athenis,  alia  nunc,  alia  posthac,  sed  et 
apud  omnes  gentcs,  it  omni  tempore,  una  eademque  lex  obtinchit.'  " 

Appreciating  the  necessity  for  revision  and  uniformity,  the  English 
Parliament  in  the  year  1882  passed  the  ''  English  Bills  of  Exchange 
Act,"  and  on  May  19,  1897,  the  Legislature  of  New  York  enacted  "An 
act  in  relation  to  Negotiable  Instruments."  This  law  was  first  recom- 
mended at  the  conference  of  the  Commissioners  on  Uniformity  of  Laws 
in  1895,  and  was  based  upon  the  "  English  Bills  of  Exchange  Act."  In 
1897  the  States  of  Connecticut,  Colorado,  and  Florida  adopted  the  New 
York  statute;  in  1898,  Massachusetts,  Maryland,  and  Virginia  fol- 
lowed; in  1899,  Rhode  Island.  Tennessee.  North  Carolina,  Wisconsin. 
North  Dakota,  Utah,  Oregon,  Washington,  and  the  District  of  Colum- 
bia; in  1901,  Pennsylvania  and  Arizona;  and  in  1902,  Ohio,  New 
Jersey,  and  Iowa. 

♦  Swift  V.  Tyson,  16  Pet.  1. 
[3-17] 


348  THE    NEGOTIABLE    INSTRUMENTS    LAW.  §§   1— t. 


PKOVISIOXS  OF  THE  ACT. 

ARTICLE  I.* 

General  Provisions. 

Section  1.  Short  title. 

2.  Definitions  and  meaning  of  terms. 

3.  Person  primarily  liable  on  instrument. 

4.  Reasonable  time,  what  constitutes. 

5.  Time,  how  computed;   when  last  day  falls  on  holiday. 

6.  Application  of  chapter. 

7.  Rule  of  law  merchant;  when  governs. 

§  I.  Short  title.—  This  act  shall  be  known  as  the  negotiable  instru- 
ments law. 

§  2.  Definitions  and  meaning  of  terms.—  In  this  act,  unless  the 
context   otherwise   requires: 

"Acceptance"'  means  an  acceptance  completed  by  delivery  or  notifi- 
cation. 

"Action  "  includes  counterclaim  and  set-ofT. 

"  Bank  "  includes  any  person  or  association  of  persons  carrying  on 
the  business  of  banking,  whether  incorporated  or  not. 

"  Bearer  "  means  the  person  in  possession  of  a  bill  or  note  which 
is  payal)le  to  bearer. 

"  Bill  ■'  means  bill  of  exchange,  and  "  note  "  means  negotiable  promis- 
sory note. 

"Delivery"  means  transfer  of  possession,  actual  or  constructive, 
from  one  person  to  another. 

"Holder"  means  the  payee  or  indorsee  of  a  bill  or  note,  who  is  in 
possession  of  it,  or  the  bearer  thereof. 

""  Indorsement "  means  an  indorsement  completed  by  delivery. 

"Instrument"  means  negotiable  instrument. 

"Issue"  means  the  first  delivery  of  the  instrument,  complete  in  form,. 
to  a  person  who  takes  it  as  a  holder. 

"  Person  "  includes  a  body  of  persons,  whether  incorporated  or  not. 

"  Value  "  means  valuable  consideration. 

"  Written  "  includes  printed,  and  "  writing  "  includes  print. 

§  3.  Person  primarily  liable  on  Instrument. —  The  person  "pri- 
marily "  liable  on  an  instrument  is  the  person  who  by  the  terms  of  the 
instrument  is  absolutely  required  to  pay  the  same.  All  other  parties 
are  "  secondarily  "  liable. 

§  4.  Reasonable  time,  what  constitutes.—  In  determining  what  is 
a  "  reasonable  time  "  or  an  "  unreasonable  time,"  regard  is  to  be  had 
to  the  nature  of  the  instrument,  the  usage  of  trade  or  business  (if 
any)  with  respect  to  such  instruments,  and  the  facts  of  the  particular 
case. 

*The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  (Colorado,  Iowa,  Massachusetts,  New  .Jersey. 
North  Carolina,  North  Dakota,  Pennsylvania,  Utah,  Virginia,  and 
Washington,  100-190;  Maryland,  1.3-10;  Ohio,  .3178-.3178e  ,•  Oregon, 
100-102;  Rhode  Island,  1-7;  Wisconsin,  107.'>.  In  Arizona,  Coimecticut, 
District,  of  Columbia,  Florida,  and  Tennessee,  these  sections  are  not 
numbered. 


§§  5-20.        THE    NEGOTLVBLE    INSTRUMENTS    LAW. 


340 


§    5.   Time,   how   computed;   when    last  day   falls   on    holiday.— 

Wlieie  tlie  day,  ur  tlii'  l:i>t  day,  lor  duiiij,'  any  act  licreiii  loquucd  or 
lienuitted  to  be  doia-  falls  on  Sunday  or  on  a  holiday,  tlie  act  may  be 
done  on  the  next  succeeding  secular  or  business  day. 

§  6.  Application  of  chapter.—  The  provisions  of  this  act  do  not 
apply  to  lu'ji. liable  in^trllnlents  made  and  delivered  prior  to  the 
passage  liereof. 

§  7.  Law  merchant;  when  governs.—  In  any  case  not  provided  for 
in  this  act  the  rules  of  the  law  merchant  shall  govern. 


ARTICLE   IL* 

Form   and    Interpretation. 

Section  20.  Form  of  negotiable   instrument. 

21.  (.'ertainty  as  to  sum;   wliat  constitutes. 

22.  When   promise  is   unconditional. 

23.  Determinable  future  time;    what  constitutes. 

24.  Additional   provisions  not  afTecting   negotiability. 

25.  Omissions;    seal;   particular  money. 
2G.  When  payable  on  demand. 

27.  When  payable  to  order. 

28.  When   payable  to  bearer. 
21).  Terms  when   sutUcient. 

30.  Date,  presumptions  as  to. 

31.  Ante-dated  and  post-dated. 

32.  When  date  may  be  ins<'rted. 

33.  Blanks,  when  may  be  filled. 

34.  Incomplete    instrument   not  delivered. 

35.  Delivery;   when  effectual:   when  presumed. 

36.  Construction  where  instrument  is  ambiguous. 

37.  Liability  of  person  signing   in  trade  or   assumed  name. 

38.  Signature  by  agent:   authority:    how  shown. 

39.  Liability  of  "person  signing  as  agent,  et  cetera. 

40.  Signature  by  procuration:   effect  of. 

41.  Effect  of  indorsement  by  infant  or  corporation. 

42.  Forged   signature;   effect  of. 

§  20.  Form  of  negotiable  instrument.— An  instrument  to  be  ne- 
gotiable mur^t  ((inform  to  tlie   following   re(iuirements: 

1.  It  must  l)e  in  writing  and  signed  by  the  maker  or  drawer. 

•2.  IMust  contain  an  unconditional  promise  or  order  to  pay  a  sum 
certain  in  money.  .     , ,     ,   . 

3.  Must  be  payable  on  demand,  or  at  a  fixed  or  determinable  future 

time. 

4.  IMust  be  pavable  to  order  or  to  bearer:  and 

5.  Where  the  instrument  is  addressed  to  a  drawee,  he  must  be  named 
or  otherwise  indicated  therein  with  reasonable  certainty^ 

•The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3304-3326:  Colorado.  Conne.^unit, 
District  of  Columbia.  Florida.  Iowa.  Massachusetts,  New  Jersey,  North 
Carolina,  North  Dakota,  Oreeon,  Pennsylvania.  Tenn.^ssee.  Utah.  \  ir- 
pinia.  and  Washington,  1-23;  Maryland.  20-42;  Ohio,  31il-31<ly; 
Rhode  Island,  9-31;  Wisconsin,  1675-1  to  1675-23. 


•  50  rHE    ^'EGOTIABLE    IXSTBUMENTS    LAW.       §§  21-25. 


§  21.  Certainty  as  to  sum;  what  constitutes. —  The  sum  payable 
is  a  sum  certain  within  tlio  meaning  of  tliis  act,  although  it  is  to  be 
paid: 

1.  With  interest;   or 

2.  By  stated  instalments;   or 

3.  By    stated    instalments,    with    a    provision    that   upon    default    i: 
payment   of    any    instalment   or    of   interest,    the    whole    shall    become 
due;  or 

4.  With  exchange,  whether  at  a  fixed  rate  or  at  the  current  rate ;  or 

5.  With  costs  of  collection  or  an  attorney's  fee,  in  case  payment 
shall  not  be  made  at  maturity. 

§  22.  When  promise  is  unconditional. —  An  unqualified  order  or 
promise  to  pay  is  unconditional  within  tlie  meaning  of  this  act,  though 
coupled  with : 

1.  An  indication  of  a  particular  fund  out  of  which  reimbursement 
is  to  be  made,  or  a  particular  aecoimt  to  be  debited  with  the  amount;  or 

2.  A  statement  of  the  transaction  which  gives  rise  to  the  instrument. 
But  an  order  or  promises*  to  pay  out  of  a  particular  fund  is  not  un- 
conditional. 

§  23.  Determinable  future  time;  what  constitutes. —  An  instru- 
ment is  payable  at  a  determinable  future  time,  within  the  meaning 
of  this  act.  which  is  expressed  to  be  payable: 

1.  At  a  fixed  period  after  date  or  sight;  or 

2.  On  or  before  a  fixed  or  determinable  future  time  specified 
therein;  or 

3.  On  or  at  a  fixed  period  after  the  occurrence  of  a  specified  event, 
which  is  certain  to  happen,  though  the  time  of  happening  be  uncertain. 

An  instrument  payable  upon  a  contingency  is  not  negotiable,  and  the 
happening  of  tlie  event  does  not  cure  the  defect. 

§  24.  Additional  provisions  not  affecting  negotiability. —  An  in- 

strinnent  which  contains  an  order  or  promise  to  do  any  act  in  addition 
to  the  payment  of  money  is  not  negotiable.  But  the  negotiable  char- 
acter of  an  instrument  otherwise  negotiable  is  not  affected  by  a  pro- 
vision which : 

1.  Authorizes  the  sale  of  collateral  securities  in  case  the  instru- 
ment be  not  paid  at  maturity;  or 

2.  Authorizes  a  confession  of  judgment  if  the  instrument  be  not 
paid  at  maturity;  or 

3.  Waives  the  benefit  of  any  law  intended  for  the  advantage  or  pro- 
tection of  the  obligor;  or 

4.  dives  the  holder  an  election  to  require  something  to  be  done 
in  lieu  of  payment  of  money. 

But  nothing  in  this  section  shall  A'alidate  any  provision  or  stipula- 
tion otherwise  illegal. 

§  25.  Omissions;  seal;  particular  money. —  The  validity  and  ne- 
gotiable character  of  an  instrument  are  not  affected  by  the  fact  that: 

1.  It  is  not  dated ;  or 

2.  Does  not  specify  the  value  given,  or  that  any  value  has  been 
given  therefor ;  or 

3.  Does  not  specify  the  place  where  it  is  drawn  or  the  place  where 
it  is  payable;   or 

4.  Bears  a  seal ;  or 

5.  Designates  a  particular  kind  of  current  money  in  which  payment 
is  to  be  made. 

*  Error  in  engrossing. 


i 


!' 


§§  26-33.       THE    XEOOTIAHLE    INSTRUMENTS    LAW.  351 

But  nothing  in  this  section  shall  alter  or  repeal  any  statute  requir- 
ing in  certain  cases  the  nature  of  the  consideration  to  be  .stated  in 
the  instrument. 

§  26.  When  payable  on  demand. —  An  instrument  is  payable  on 
demand : 

1.  Where  it  is  expressed  to  be  payable  on  demand,  or  at  sight,  or 
on  presentation ;  or 

2.  In  wliich  no  time  for  payment  is  expressed. 

Where  an  instrument  is  issued,  accepted  or  indorsed  when  overdue, 
it  is,  as  regards  the  person  so  issuing,  accepting  or  indorsing  it,  pay- 
able on  deiuaiid. 

§   27.  When  payable  to  order. —  The  instrument  is  payable  to  order 
where  it  is  drawn  payable  to  the  order  of  a  specified  person  or  to  him 
or  his  order.     It  may  be  drawn  payable  to  the  order  of: 
•  I:  A  i)ayee  who  is  not  maker,  drawer  or  drawee ;  or 

2.  'Hie  drawer  or  maker;  or 

3.  The  diawee;  or 

4.  Two  or  iifiore  payees  jointly;  or 

5.  One  or  some  of  several   pajees;   or 

6.  The  holder  of  an  oflioe  for  tlie  time  being. 

Where  the  instrument  is  payable  to  order  the  payee  must  be  named 
or  otherwise  indicated  therein   with  rea.sonable  certainty. 

§  28.  When  payable  to  bearer. —  The  instrument  is  payable  to 
bearer : 

1.  \\lien  it  is  expressed  to  be  so  payable;    or 

2.  When  it  is  payable  to  a  person  named  therein  or  bearer:   or 

3.  When  it  is  payable  to  the  order  of  a  fictitious  or  non-existing  per- 
son, and  such  fact  was  known  to  the  person  making  it  so  payable:  or 

4.  When  the  name  of  the  payee  does  not  purport  to  be  the  name  of 
any  person;   or 

5.  W'hen  the  only  or  last  indorsement  is  an  indorsement  in  blank. 

§  29,  Terms  when  sufficient. —  The  instrument  need  not  follow  the 
language  of  this  act,  but  any  terms  are  suflTicient  which  clearly  indicate 
an  intention  to  conform  to  the  requirements  hereof. 

§  30.  Date,  presumption  as  to. —  Where  the  instrument  or  an  ac- 
ceptance or  any  indorsement  thereon  is  dated,  such  date  is  deemed 
prima  facie  to  be  the  true  date  of  the  making,  drawing,  acceptance  or 
indorsement,  as  the  case  may  be. 

§  31.  Ante=dated  and  post=dated. —  The  instrument  is  not  invalid 
for  the  reason  only  that  it  is  ante-dated  or  post-dated,  provided  this 
is  not  done  for  an  illegal  or  fraudulent  purpose.  The  person  to  whom 
an  instrument  so  dated  is  delivered  acquires  the  title  thereto  as  of  the 
date  of  delivery. 

§  32.  When  date  may  be  inserted. —  Where  an  instrument  ex- 
pressed to  be  payable  at  a  fixed  period  after  date  is  issued  undated, 
or  where  the  acceptance  of  an  instrument  payable  at  a  fixed  period 
after  sight  is  undated,  any  holder  may  insert  therein  the  true  date 
of  issue  or  acceptance,  and  the  instrument  shall  be  payable  accordingly. 
The  insertion  of  a  wrong  date  does  not  avoid  the  instrument  in  the 
hands  of  a  subsequent  holder  in  due  course;  but  as  to  him,  the  date 
so  in.serted  is  to  he  regarded  as  the  true  date. 

§  33.  Blanks;  when  may  be  filled. —  Where  the  instrument  is  want- 
ing in  any  material  particular,  the  person  in  possession  thereof  has  a 
prima  facie  authority  to  complete  it  by  filling  up  the  blanks  therein. 
And  a  signature  on  a  blank  paper  delivered  by  the  person  making  the 
signature  in  order  that  the  paper  may  be  converted  into  a  negotiable 


352  THE    NEGOTIABLE    INSTRUMENTS    LAW.        §§  34-37. 

instrument  operates  as  a  prima  facie  authority  to  fill  it  uj)  as  such  for 
any  amount.  In  order,  however,  that  any  such  instrument,  when  com- 
pleted, may  be  enforced  against  any  person  who  became  a  party  thereto 
prior  to  its  completion,  it  must  be  tilled  up  strictly  in  accordance  with 
the  authority  given  and  within  a  reasonable  time.  But  if  any  such 
instrument,  after  completion  is  negotiated*  to  a  holder  in  due  course, 
it  is  valid  and  elTectual  for  all  purposes  in  his  hands,  and  he  may  en- 
force it  as  if  it  had  been  tilled  up  strictly  in  accordance  with  the 
authority  given  and  within  a  reasonable  time. 

§  34.  Incomplete  instrument  not  delivered.—  Where  an  incom- 
plete instrument  has  not  been  delivered  it  will  not,  if  completed  and 
negotiated,  witliout  authority,  be  a  valid  contract  in  the  hands  of  any 
holder,  as  against  any  person  whose  signature  was  placed  thereon  before 
delivery. 

§  35.  Delivery;  when  effectual;  when  presumed.— Every  con- 
tract on  a  negotiable  instrument  is  incomplete  and  revocable  until  de- 
livery of  the  Instrument  for  the  purpose  of  giving  eflfect  thereto.  As 
between  immediate  parties,  and  as  regards  a  remote  party  other  than 
a  liolder  in  due  course,  the  delivery,  in  order  to  be  effectual,  must  be 
made  either  by  or  under  the  authority  of  the  party  making,  drawing,  ac- 
cepting, or  indorsing,  as  the  case  may  be;  and  in  such  case  the  deliv- 
ery may  be  shown  to  have  been  conditional,  or  for  a  special  purpose 
only,  and  not  for  the  purpose  of  transferring  the  property  in  the  in- 
strument. But  where  the  instrument  is  in  the  hands  of  a  holder  in 
due  course,  a  valid  delivery  thereof  by  all  parties  prior  to  him  so  as 
to  make  them  liable  to  him  is  conclusively  presumed.  And  where  the 
instrument  is  no  longer  in  the  possession  of  a  party  whose  signature 
appears  thereon,  a  valid  and  intentional  delivery  by  him  is  presumed 
until  the  contrary  is  proved. 

§  36.  Construction  where  instrument  is  ambiguous.—  Where  the 
language  of  the  instrument  is  ambiguous,  or  there  are  omissions  therein, 
the  following  rules  of  construction  apply: 

1.  Where  the  sum  payable  is  expressed  in  Avords  and  also  in  figures 
and  there  is  a  discrepancy  between  the  two,  the  sum  denoted  by  the 
words  is  the  sum  payable;  but  if  the  words  are  ambiguous  or  uncer- 
tain, references  may  be  had  to  the  figures  to  fix  the  amount; 

2.  Where  the  instrument  provides  for  the  payment  of  interest,  with- 
out specifying  the  date  from  which  interest  is  to  run,  the  interest  runs 
from  the  'date  of  the  instrument,  and  if  the  instrument  is  undated, 
from  the  issue  thereof; 

3.  Where  the  instrument  is  not  dated,  it  will  be  considered  to  be 
dated  as  of  the  time  it  was  issued; 

4.  Where  there  is  a  conilict  between  the  wn-itten  and  printed  pro- 
visions of  the  instrument,  the  written  provisions  prevail; 

5.  Where  the  instrument  is  so  ambiguous  that  there  is  doubt  whether 
it  is  a  bill  or  note,  the  holder  may  treat  it  as  either  at  his  election; 

6.  Wliere  a  signature  is  so  placed  upon  the  instrument  that  it  is  not 
clear  in  what  capacity  the  person  making  the  same  intended  to  sign, 
he  is  to  be  deemed  an  indorser;  ^  , 

7.  Where  an  instrument  containing  the  words  "  I  promise  to  pay  "  is 
signed  by  two  or  more  persons,  they  are  deemed  to  be  jointly  and 
severally  liable  thereon. 

§  37.  Liability  of  person  signing  in  trade  or  assumed  name.— 
No  person  is  liable  on  the  instrument  whose  signature  does  not  appear 
thereon,  except  as  herein  otherwise  expressly  provided.     But  one  who 

*  The  word  "  negotiated "  substituted  for  "  negotiable "  by  Laws 
of  X.  Y.  1898,  c.  33G. 


§§38-51.        TJIK    XEGOTlAilLE    INSTRUMENTS    LAW. 


353 


signs  in  a  trade  or  assumed  name  will  bo  liable  to  the  same  extent 
as  ii"  he  had  signed  in  his  o\sTi  name. 

§  38.  Signature   by   agent;  authority;   how   shown.— The  signa- 

1\\i-  .It  aiiv  i>ar1\-  may  lie  iiiadi'  by  a  duly  authorized  agent.  No  par- 
ticular foim  of  appointment  is  necessary  for  this  purpose;  and  the 
authority  of  the  agent  may  be  established  as  in  other  cases  of  agency. 

§  39,  Liability  of  person  signing  as  agent,  etc.—  Where  the  in- 
strument contains  or  a  person  adds  to  lii>  signature  words  indicating 
that  he  signs  for  or  on  behalf  of  a  princii)al,  or  in  a  reiiiesentative 
capacity,  he  is  not  liable  on  the  instrument  if  he  was  duly  authorized; 
but  the  mere  addition  of  words  describing  him  as  an  agent,  or  as 
filling  a  representative  eharaetor,  without  disclosing  his  principal,  does 
not  e.vempt  him  from  personal  liability. 

§  40.  Signature  by  procuration;  effect  of.— A  signature  by  "  pro- 
curation "  operates  as  notice  that  the  agent  has  but  a  limited  author- 
ity to  sign,  and  the  principal  is  bound  only  in  case  the  agent  in  so 
signing  acted  within  the  actual  limits  of  his  authority. 

§  41.  Effect  of  indorsement  by  infant  or  corporation.— The  in 
dorsement  or  assignment  of  the  itistrtimcnt  by  a  corporation  or  by  an 
infant  passes  the  property  therein,  notwithstanding  that  from  want 
of  capacity  the  corporation  or  infant  may  incur  no  liability  thereon. 

§  42.  Forged  signature;  effect  of.— Where  a  signature  is  forged  or 
made  without,  authority  of  the  person  whose  signature  it  purports  to 
"be,  it  is  wholly  inoperative,  and  no  right  to  retain  the  instrument,  or 
to  give  a  discharge  therefor,  or  to  enforce  payment  thereof  against  any 
party  thereto,  can  be  acquired  through  or  under  such  signature,  unless 
the  party  against  whom  it  is  sought  to  enforce  such  right  is  precluded 
from  setting  up  the  forgery  or  want  of  authority. 

ARTICLE  IIL* 
Consideration  of  Negotiable  Instruments. 

Section  50.  Trcsumption  of  consideration. 

51.  What  constitutes  consideration. 

52.  What  constitutes  holder  for  value. 

53.  When  lien  on  instrument  constitutes  holder  for  value. 

54.  Effect  of  want  of  consideration. 

55.  Liability  of  accommodation  party. 

§  50.  Presumption  of  consideration.— Every  negotiable  instru- 
ment is  deemed  prima  facie  to  have  been  issued  for  a  valuable  con- 
sideration; and  every  person  whose  signature  appears  thereon  to  have 
become  a  party  thereto  for  value. 

§  51.  Consideration,  what  constitutes.— Value  is  any  considera- 
tion sufficient  to  support  a  simple  contract.  An  antecedent  or  pre- 
existing debt  constitutes  value;  and  is  deemed  such  whether  the  instru- 
ment is  payable  on  demand  or  at  a  future  time. 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona.  3.327-3332:  Colorado.  Connecticut, 
District  of  Columbia.  Florida.  Iowa,  Massachusetts,  New  Jersey.  North 
Carolina,  North  Dakota,  Oregon,  Pennsylvania,  Tennessee,  LHah,  Vir- 
ginia, and  Washinsrton.  24-2!);  ^Tarvland.  43-4S :  Oliio.  317lH--3172n; 
Rhode  Island,  32-37;  Wisconsin,  1G7.J-50  to  1075-55. 
09, 


354:  THE    NEGOTIABLE    IXSTKUMEXTS    LAW.        §§  52-GO. 

§  52.  What  constitutes  holder  for  value.— Where  value  has  at 
any  time  been  given  for  the  instrument,  the  holder  is  deemed  a  holder 
for  value  in  respect  to  all  parties  who  became  such  prior  to  that  time. 

§  53-  When  lien  on  instrument  constitutes  holder  for  value.— 
Where  the  holder  has  a  lien  on  the  instrument,  arising  cither  from 
contract  or  by  implication  of  law,  he  is  deemed  a  holder  for  value  to  tlie 
extent  of  his  lien. 

§  54.  Effect  of  want  of  consideration.—  Absence  of  failure  of  con- 
sideration is  matter  of  defense  as  against  any  person  not  a  holder  in 
due  course;  and  partial  failure  of  consideration  is  a  defense  pro  tanto, 
whether  the  failure  is  an  ascertained  and  liquidated  amount  or  other- 
wise. 

§  55.  Liability  of  accommodation  party.— An  accommodation 
party  is  one  who  has  signed  the  instrument  as  maker,  drawer,  ac- 
ceptor, or  indorser.  without  receiving  value  therefor,  and  for  the  pur- 
pose of  lending  his  name  to  some  o*.her  person.  Such  a  person  is 
liable  on  the  instrument  to  a  holder  for  value,  notwithstanding 
such  holder  at  the  time  of  taking  the  instrument  knew  him  to  be 
only  an  accommodation  party. 

ARTICLE  IV. 

Negotiation. 

Section  60.  What  constitutes  negotiation. 
6L  Indorsement;  how  made. 

62.  Indorsement  must  be  of  entire  instrument. 

63.  Kinds  of  indorsement. 

64.  Special  indorsement;   indorsement  in  blank. 

65.  Blank   indorsement;    how  changed   to  special  indorsement. 

66.  When  indorsement  restrictive. 

67.  Effect  of  restrictive  indorsement;  rights  of  indorsee. 

68.  Qualified   indorsement. 

69.  Conditional  indorsement. 

70.  Indorsement  of  instrument  payable  to  bearer. 

71.  Indorsement  where  payable  to  two  or  more  persons. 

72.  Effect   of   instrument   drawn    or   indorsed    to   a   person   aa 

cashier. 

73.  Indorsement  where  name  is  misspelled,  et  cetera. 

74.  Indorsement  in  representative  capacity. 

75.  Time  of  indorsement;   presumption. 

76.  Place  of  indorsement;   presumption. 

77.  Continuation  of  negotiable  character. 

78.  Striking  out  indorsement. 

79.  Transfer  without  indorsement ;  effect  of. 

80.  When  prior   party  may  negotiate  instrument. 

§  60.  What  constitutes  negotiation.—  An  instrument  is  negotiated 
when  it  is  transferred  from  one  person  to  another  in  such  mahner  as 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3333-3353;  Colorado,  Connecticut. 
District  of  Columbia,  Florida.  Iowa,  Massachusetts,  New  Jersey.  North 
Carolina,  North  Dakota,  Oregon.  Pennsylvania,  Tennessee.  Utah.  Vir- 
ginia, and  Washington,  30-50;  Maryland.  49-69;  Ohio,  31726-3172i;; 
Rhode  Island,  38-58;  Wisconsin,  1070  to  1676-20. 


§§  61-68.       THE    NKGOTlAliLK    IXSTKUMENTS    LAW.  ."J.J.J 

to  constitute  the  transferee  the  holder  thereof.  If  payable  to  U-urcr 
it  is  negotiated  by  delivery;  if  payable  to  order  it  is  negotiated  by  the 
indorsement  of  tlie  bolder  cunipleled  by  delivery. 

§  6 1.  Indorsement;  how  made.— The  indorsement  must  be  written 
on  the  instrument  itself  or  upon  a  paper  attached  tliereto.  The  signa- 
ture of  the  indorser,  without  additional  words,  is  a  sufficient  indorse- 
ment. 

§  62.  Indorsement  must  be  of  entire  instrument.—  The  indorse- 
ment must  be  an  indorsement  of  the  entire  instrument.  An  indorse- 
ment, whieli  purports  to  transfer  to  the  indorsee  a  part  only  of  the 
amount  payable,  or  which  purports  to  transfer  the  instrumoit  to  two 
or  more  indorsers  severally,  does  not  operate  as  a  negotiation  of  the 
instrument.  But  where  the  instrument  has  been  paid  in  part,  it  may 
be  indorsed  as  to  the  residue. 

§  63.  Kinds  of  indorsement.— An  indorsement  may  be  either  spe- 
cial or  in  l)laiik;  and  it  may  also  be  either  restrictive  or  qualified,  or 
conditional. 

§  64.  Special  indorsement;  indorsement  in  blank. —  A  special 
indorsement  specifies  the  person  to  whom,  or  to  whose  order  the  in.stru- 
ment  is  to  be  payable;  and  the  indorsement  of  such  indorsee  is  necessary 
to  the  further  negotiation  of  the  instrument.  An  indorsement  in  blank 
specifies  no  indorsee,  and  an  instrument  so  indorsed  is  payable  to 
bearer,  and  may  be  negotiated  by  delivery. 

§  65.  Blank  indorsement;  how  changed  to  special  indorsement. 

—  The  holder  may  convert  a  blank  indorsement  into  a  special  indorse- 
ment by  writing  over  the  signature  of  the  indorser  in  blank  any  con- 
tract consistent  with  the  character  of  the  indorsement. 

§  66.  When  indorsement  restrictive.— An  indorsement  is  restric- 
tive, which  either : 

1.  Prohibits  the  further  negotiation  of  the  instrument;  or 

2.  Constitutes  the  indorsee  the  agent  of  the  indorser;  or 

3.  Vests  the  title  in  the  indorsee  in  trust  for  or  to  the  use  of  some 
other  person. 

But  the  mere  absence  of  words  implying  power  to  negotiate  does  not 
make  an  indorsement  restrictive. 

§  67.  Effect  of  restrictive  indorsement;  rights  of  indorsee.— 
A  restrictive  indorsement  confers  upon  the  indorsee  the  right: 

1.  To  receive  payment  of  the  instrument; 

2.  To  bring  any  action  thereon  that  the  indor.ser  could  bring; 

3.  To  transfer  his  rights  as  such  indorsee,  where  the  form  of  the 
indorsement  authorizes  him  to  do  so. 

But  all  subsequent  iTidorsecs  acquire  only  the  title  of  the  fir-t  in- 
dorsee under   the  restrictive  indorsement. 

§  68.  Qualified  indorsement.*-  --^  qualified  indorsement  constitutes 
the  indorser  a  mere  assignor  of  the  title  to  the  instrument.  It  may  be 
made  by  adding  to  the  indorser's  signature  the  words  "  without  re- 
course"  or  any  words  of  similar  import.  Such  an  indorsement  does 
not  impair  the  negotiable  character  of  the  instrument. 


*  The  dash  and  the  words  "  a  qualified  indorsement  "'  omitted  in  the 
original  act  through  error  were  added  by  Laws  N.  Y.  1898.  c.  336. 


35G  TILE    XEGOTIAr.LE    INSTRUMENTS    LAW.        §§  69-79. 

§  69.  Conditional  indorsement.—  Where  an  indorsement  is  condi- 
tional, a  party  requiretl  to  pay  the  instriuucnt  may  disrei^^ard  the  con- 
dition and  make  payment  to  the  indorsee  or  his  transferee,  whether 
the  condition  has  hecn  fulfilled  or  not.  But  any  person  to  whom  an 
instrument  so  indorsed  is  nejjotiated  will  hold  the  same,  or  the  pro- 
ceeds thereof,  subject  to  the  rights  of  the  person  indorsing  conditionally. 

§  70.  Indorsement  of  instrument  payable  to  bearer. —  Where 
an  instrument,  payable  to  bearer,  is  indorsed  specially,  it  may,  never- 
theless, be  further  negotiated  by  dclivory.  but  the  person  indorsing 
specially  is  liable  as  indorser  to  only  such  holders  as  make  title  through 
his  indorsement. 

§  71.  Indorsement   where   payable   to   two   or   more   persons. — • 

Where  an  instrument  is  jjayable  to  the  order  of  two  or  more  jiayocs  or 
indorsees  wlio  are  not  ])artners.  all  must  ijidorse,  unless  the  one  indors- 
ing has  authority  to  indorse  for  the  others. 

§  72.  Effect  of  instrument  drawn  or  indorsed  to  a  person  as 
cashier. —  Wliere  an  instrument  is  drawn  or  indorsed  to  a  person  as 
"  cashier  "  or  other  fiscal  officer  of  a  bank  or  corporation,  it  is  deemed 
prima  facie  to  be  payable  to  the  bank  or  corporation  of  which  he  is 
such  officer ;  and  may  be  negotiated  by  either  the  indorsement  of  the 
bank  or  corporation,  or  the  indorsement  of  the  officer. 

§  73.  Indorsement  where  name  is  misspelled,  et  cetera.— Where 

the  name  of  a  payee  or  indorsee  is  wrongfully  designated  or  misspelled, 
he  may  indorse  the  instrument  as  therein  described,  adding,  if  he  think 
fit,  his  proper  signature. 

§  74.  Indorsement  in  representative  capacity. —  Where  any  per- 
son is  under  obligation  to  indorse  in  a  representative  capacity,  he  may 
indorse  in  such  terms  as  to  negative  personal  liability. 

§  75.  Time  of  indorsement;  presumption. —  Except  where  an  in- 
strument bears  date  after  the  maturity  of  the  instrument,  every  nego- 
tiation is  deemed  prima  facie  to  have  been  effected  before  the  instru- 
ment was  overdue. 

§  76.  Place  of  indorsement;  presumption. —  Except  where  the  con- 
trary appears  every  indorsement  is  presumed  prima  facie  to  have  been 
made  at  the  place  where  the  instrument  is  dated. 

§  77.  Continuation  of  negotiable  character. —  An  instrument  nego- 
tiable in  its  origin  continues  to  be  negotiable  until  it  has  been  re- 
strictively  indorsed  or  discharged  by  payment  or  otherwise. 

§  78.  Striking  out  indorsement. —  The  holder  may  at  any  time 
strike  out  any  indorsement  which  is  not  necessary  to  his  title.  The 
indorser  whose  indorsement  is  struck  out,  and  all  indorsers  subsequent 
to  him,  are  thereby  relieved  from  liability  on  the  instrument. 

§  79.  Transfer  without  indorsement;  effect  of. —  Where  the 
holder  of  an  instrument  payable  to  his  order  transfers  it  for  value 
without  indorsing  it,  the  transfer  vests  in  the  transferee  such  title  as 
the  transferrer  had  therein,  and  the  transferee  acquires,  in  addition, 
the  right  to  have  the  indorsement  of  the  transferrer.  But  for  the  pur- 
pose of  determining  whether  the  transferee  is  a  holder  in  due  course, 
the  negotiation  takes  efTect  as  of  the  time  when  the  indorsement  is 
actuallv  made. 


§§  80-94.       THE    NEGOTIABLE    INSTRUMENTS    LAW.  357 

S  80.  When  prior  party   may   negotiate   instrument.—  Where  an 

instrument  is  ne^Dtialcd  bac-k  to  a  piior  party,  wucli  party  may,  sub- 
ject to  the  provisions  of  this  act,  reissue  and  fiullier  negotiate  the 
same.  But  he  is  not  entitled  to  enforce  payment  thereof  against  any 
intervening  party  to  whom  he  was  personally  liable. 


ARTICLE  v.* 
Rij^hts  of   Holder. 

Section  90.  Right  of  holder  to  sue ;   payment. 

91.  What  constitutes  a  holder  in  due  course. 

92.  When  jjcrson  not  deemed  holder  in  due  course. 

93.  Notice  before  full  amount  paid. 

94.  When   title  defective. 

95.  What  constitutes  notice  of  defect. 
90.  Riglits  of  holder  in  due  course. 

97.  When  subject  to  original  defenses. 

98.  Who  deemed  holder  m  due  course. 

§  90.  Right  of  holder  to  sue;  payment.— The  holder  of  a  negoti- 
able instrument  may  sue  tliereon  in  his  own  name;  and  payment  to 
him  in  due  course  discharges  the  instrument. 

§  91.  What  constitutes  a  holder  in  due  course. —  A  holder  in  due 
course  is  a  holder  who  has  taken  the  instrument  under  the  following 
conditions: 

1.  That  it  is  complete  and  regular  upon  its  face; 

2.  That  he  became  tlie  holder  of  it  before  it  was  overdue,  and  without 
notice  that  it  had  been  previously  dishonored,  if  such  were  the  fact; 

3.  That  he  took  it  in  good  faith  and  for  value; 

4.  That  at  the  time  it  was  negotiated  to  him  he  had  no  notice  of 
any  infirmity  iu  tlie  instrument  or  defect  in  the  title  of  the  person 
negotiating  it. 

§  92.  When  person  not  deemed  holder  in  due  course. — Where  an 
instrument  paj'able  on  demand  is  negotiated  an  unreasonable  length 
of  time  after  its  issue,  the  holder  is  not  deemed  a  holder  in  due  course. 

§  93.  Notice  before  full  amount  paid.—  Where  the  transferee  re- 
ceives notice  of  any  infirmity  in  the  instrument  or  defect  in  the  title 
of  the  person  negotiating  the  same  before  he  has  paid  the  full  amount 
agreed  to  be  paid  therefor,  he  will  \^c  deemed  a  holder  in  due  course 
only  to  the  extent  of  the  amount  theretofore  paid  by  him. 

§  94.  When  title  defective. —  The  title  of  a  person  who  negotiates 
an  instrument  is  defective  within  the  meaning  of  this  act  when  he 
obtained  the  instrument,  or  any  signature  thereto,  by  fraud,  duress,  or 
force  and  fear,  or  other  unlawful  means,  or  for  an  illegal  consideration, 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona.  33;')4-33()2 ;  Colorado,  Connecticut, 
District  of  Columbia,  Florida.  Iowa,  Massachusetts,  New  Jersey,  North 
Carolina,  North  Dakota,  Oregon.  Pennsylvania,  Tennessee,  Utah,  Vir- 
ginia, and  Washington,  .')l-59;  ^laryland.  70-78;  Ohio,  3172tc-3173d; 
Rhode  Island,  59-07;    Wisconsin,   1070-21   to   1G7G-29. 


35S  THE    NEGOTIABLE    IXSTBUMENTS    LAW..        §§  95-111. 

or  when  he  negotiates  it  in  breach  of  faith,  or  under  such  circumstances 
as  amount  to  a  fraud. 

§  95.  What  constitutes  notice  of  defect.— To  constitute  notice  of 
an  intirmity  in  the  instrument  or  defect  in  the  title  of  the  person  nego- 
tiating the  same,  the  person  to  whom  it  is  negotiated  must  have  had 
actual  knowledge  of  the  iniirmity  or  defect,  or  knowledge  of  such  facts 
that  his  action  in  taking  the  instrument  amounted  to  bad  faith. 

§  96.  Rights  of  holder  in  due  course.—  A  holder  in  due  course 
holds  the  instrument  free  from  any  defect  of  title  of  prior  parties 
among  themselves,  and  may  enforce  payment  of  the  instrument  for  the 
full  amount  thereof  against  all  parties  liable  thereon. 

§  97.  When  subject  to  original  defenses. —  In  the  hands  of  any 
holder  other  than  a  holder  in  due  course,  a  negotiable  instrument  is 
subject  to  the  same  defenses  as  if  it  were  non-negotiable.  But  a 
holder  who  derives  his  title  through  a  holder  in  due  course,  and  who 
is  not  himself  a  party  to  any  fraud  or  illegality  affecting  the  instru- 
ment, has  all  the  rights  of  such  former  holder  in  respect  of  all  parties 
prior  to  the  latter. 

§  98.  Who  deemed  holder  in  due  course.—  Every  holder  is  deemed 
prima  facie  to  be  a  holder  in  due  course ;  but  when  it  is  shown  that 
the  title  of  any  person  who  has  negotiated  the  instrument  was  de- 
fective, the  burden  is  on  the  holder  to  prove  that  he  or  some  person 
under  whom  he  claims  acquired  the  title  as  a  holder  in  due  course. 
But  the  last-mentioned  rule  does  not  apply  in  favor  of  a  party  who 
became  bound  on  the  instrument  prior  to  the  acquisition  of  such  de- 
fective title. 

ARTICLE  VI.* 
Liabilities  of  Parties. 

Section  110.  Liability  of  maker. 

111.  Liability  of  drawer. 

112.  Liability  of  acceptor. 

113.  When  person  deemed  indorser. 

114.  Liability  of  irregular  indorser. 

115.  Warranty;  where  negotiation  by  delivery,  et  cetera. 
IIG.  Liability  of  general  indorsers. 

117.  Liability  of  indorser  where  paper  negotiable  by  delivery. 

118.  Order  in  which  indorsers  are  liable. 

119.  Liability  of  agent  or  broker. 

§  no.  Liability  of  maker. —  The  maker  of  a  negotiable  instrument 
by  making  it  engages  that  he  will  pay  it  according  to  its  tenor;  and 
admits  the  existence  of  the  payee  and  his  then  capacity  to  indorse. 

§  III.  Liability  of  drawer.— The  drawer,  by  drawing  the  instru- 
ment, admits  the  existence  of  the  payee  and  his  then  capacity  to  in- 
dorse;  and  engages  that  on  due  presentment  the  instrument  will  be 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3.363-3372;  Colorado,  Connecticut, 
District  of  Columbia,  Florida,  Iowa,  Massachusetts,  New  Jersey,  North 
Carolina,  North  Dakota,  Oregon,  Pennsylvania,  Tennessee,  Utah,  Vir- 
ginia, and  Washinerton.  GO-fiO ;  Marvland,  79-88;  Ohio,  3173e-3173w; 
Rhode  Island,  68-77;  Wisconsin,  1677  to  1677-9. 


j§   112-110.        THE    NEGOTlAlJi.K     1  .N  .STIIU  MEXTS     LAW. 


359 


accepted  and*  paid,  or  both,  according  to  its  tenor,  and  that  if  it  be 
dishonored  and  the  necessary  proceedings  on  dishonor  be  duly  taken, 
he  will  pay  the  amount  thereof  to  the  holder,  or  to  any  subsequent 
indorser  wlio  niav  be  compelled  to  pay  it.  But  the  drawer  may  insert 
in  the  instrument  an  express  stipulation  negativing  or  limiting  his 
own  liability  to  the  holder. 

§  112.  Liability  of  acceptor.— The  acceptor  by  accepting  the  in^ 
strument  engages  that  he  will  pay  it  according  to  the  tenor  of 
his  acceptance:    and  admits: 

1.  The  existence  of  the  drawer,  the  genuineness  of  his  signature,  and 
his  capacity  and  authority  to  draw  the  instrument;   and 

2.  The  existence  of  the  payee  and  his  then  capacity  to  indorse. 

§  113.  When  person  deemed  indorser.—  A  person  placing  his  sig- 
nature upon  an  instrument  otherwise  than  to  maker,  drawer,  or  ac- 
ceptor is  deemed  to  be  an  indorser,  unless  he  clearly  indicates  by 
appropriate  words  his  intention  to  be  bound  in  some  other  capacity. 

§  114.  Liability  of  irregular  indorser.— Where  a  person,  not  other- 
wise a  party  to  an  instrument,  places  thereon  his  signature  in  blank 
before  delivery,  he  is  liable  as  indorser  in  accordance  with  the  following 

rules:  ,         ,       .,  .    ,  V.     ■ 

1.  If  the  instrument  is  payable  to  the  order  of  a  third  person,  he  is 
liable  to  the  payee  and  to  all  subsequent  parties. 

2.  If  the  instrument  is  payable  to  the  order  of  the  maker  or  drawer, 
or  is  payable  to  bearer,  he  is  liable   to   all   parties  subsequent  to  the 

maker  or  drawer.  ,      .     t  ui     ^       n 

3.  If  he  signs  for  the  accommodation  of  the  payee  he  is  liable  to  all 
parties  subsequent  to  the  payee. 

§   115.  Warranty    where    negotiation    by    delivery,    et   cetera.— 

Every  person   negotiating  an  instrument  by  delivery  or  by  a  qualified 
indorsement,  warrants:  ^        x,   ^   -i. 

1.  That  the  instrument  is  genuine  and  in  all  respects  what  it  pur- 
ports to  be; 

2.  That  he  has  a  good  title  to  it; 

3.  That  all  parties  had  capacity  to  contract; 

4.  That  he  has  no  knowledge  of  any  fact  which  would  impair  the 
validity  of  the  instrument  or  render  it  valueless. 

But  when  the  negotiation  is  by  delivery  only,  the  warranty  extends 
in  favor  of  no  holder  other  than  the  immediate  transferee.  Tlie  pro- 
visions of  subdivision  three  of  this  section  do  not  apply  to  persons  nego- 
tiating public  or  corporate  securities,  other  than  bills  and  notes. 

§  116.  Liability  of  general  indorser.- Every  indorser  who  indorses 
without  qualification,  warrants  to  all  .subsequent  holders  in  due  course: 

1.  The  matter  and  things  mcnlioiicd  in  subdivisions  one,  two,  and 
three  of  the  next  preceding  section ;  and 

2.  That  the  instrument  is  at  the  time  of  his  indorsement  valid  and 
subsisting.  .       ,    ,,   , 

And,  in  addition,  he  engages  that,  on  due  presentment,  it  shall  be 
accepted  or  paid,  or  both,  as  the  case  may  be,  according  to  its  tenor, 
and  that  if  it  be  dishonored,  and  the  necessary  proceedings  on  dishonor 
be  duly  taken,  he  will  pay  the  amount  thereof  to  the  holder,  or  to  any 
subsequent  indorser  who  may  be  compelled  to  pay  it. 

•  Error  in  engrossing.  Tlie  word  in  the  Commissioners'  draft  is 
"  or."  The  mistake  was  not  corrected  by  Laws  X.  Y.  1898,  c.  336.  It 
occurs  only  in  the  New  York  statute. 


3G0  THE     XlXiOTIABLK    1A-.STUUME2<TS    LAW.        g§   117-130. 

§  117.  Liability  of  indorser  where  paper  negotiable  by  delivery, 

—  Where  a  poison  placeis  his  indorsement  on  an  instrument  negotiable 
by  delivery  he  incurs  all  the  liabilities  of  an  indorser. 

§  118.  Order  in  which  indorsers  are  liable.—  As  respects  one  an- 
other, indorsers  are  liable  prima  facie  in  the  order  in  which  they  in- 
dorse; but  evidence  is  admissible  to  show  that  as  between  or  among 
themselves  they  have  agreed  otherwise.  Joint  payees  or  joint  indorsees 
who  indorse  are  deemed  to  indorse  jointly  and  severally. 

§  119.  Liability  of  agent  or  broker.— Where  a  broker  or  other 
agent  negotiates  an  instrument  without  indorsement,  he  incurs  all  the 
liabilities  prescribed  by  section  one  hundred  and  fifteen*  of  this  act, 
unless  he  discloses  the  name  of  his  principal,  and  the  fact  that  he  is 
acting  only  as  agent. 

ARTICLE  VII. t 

Presentment  for  Payment. 

Section  130.  Effect  of  want  of  demand  on  principal  debtor. 

131.  Presentment  where  instrument  is  not  payable  on  demand. 

132.  What  constitutes  a  sufficient  presentment. 

133.  Place  of  presentment. 

134.  Instrument  must  be  exhibited. 

135.  Presentment  where  instrument  payable  at  bank. 

136.  Presentment  where  principal  debtor  is  dead. 

137.  Presentment  to  persons  liable  as  partners. 

138.  Presentment  to  joint  debtors. 

139.  When  presentment  not  required  to  charge  the  drawer. 

140.  When  presentment  not  required  to  charge  the  indorser. 

141.  When  delay  in  making  presentment  is  excused. 

142.  When  presentment  may  be  dispensed  with. 

143.  When   instrument   dishonored   by   non-payment. 

144.  Liability   of    person   secondarily    liable,   when   instrument 

dishonored. 

145.  Time  of  maturity. 

146.  Time ;  how  computed. 

147.  Rule  where   instrument  payable   at  bank. 

148.  What  constitutes  payment  in  due  course. 

§  130.  Effect  of  want  of  demand  on  principal  debtor. —  Present- 
ment for  paj'ment  is  not  necessary  in  order  to  charge  the  person  pri- 
marily liablet  on  the  instrument:  but  if  the  instrument  is,  by  its  terms, 
payable  at  a  special  place,  and  he  is  able  and  willing  to  pay  it  there 
at  maturity  and  has  funds  there  available  for  that  purpose,  such  ability 

•Amended  by  Laws  of  N.  Y.  1898,  c.  336,  so  as  to  give  correct 
number. 

t  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3373-3391;  Colorado.  Connecticut, 
District  of  Columbia,  Florida,  Iowa,  Massachusetts,  New  Jersey.  North 
Carolina,  North  Dakota,  Oregon,  Pennsylvania,  Tennessee,  Utah,  Vir- 
ginia, and  Washington,  70-88;  Maryland,  89-107;  Ohio,  3173o-3174f; 
Rhode  Island,  78-06;   Wisconsin,  1678  to  1678-18. 

$  The  word  "liable"  omitted  in  the  New  York  Act  of  1897  supplied 
by  Act  of  1898,  c.  336.  In  the  Wisconsin  act  all  of  the  first  sentence 
after  the  words  "primarily  liable  on  the  instrument"  is  omitted. 


§§  131-137.        TIIK     MXJOTIAULK     INSTKU.M  KXTS     LAW.  3G1 

and  willingnosa  are  equivalent  to  a  tender  of  payment  upon  his  part. 
Hut  except  as  herein  ottierwise  provided,  presentment  for  payment  is 
necessary  in  order  to  charge  the  drawer  and  inUursers. 

§  131.  Presentment  where  instrument  is  not  payable  on  de- 
mand.—  Where  the  instrument  is  not  jjayahh-  on  demand,  presentment 
must  he  made  on  tiie  day  it  falls  due.  Where  it  is  payahle  on  demand, 
j)resentment  must  he  made  witliin  a  reasonahle  time  after  its  issue, 
except  that  in  case  of  a  hill  of  exchange,  presentment  for  payment  will 
he  suflicient  if  made  within  a  reasonahle  time  after  the  last  negotiation 
thereof. 

§  132.  What  constitutes  a  sufficient  presentment. —  Presentment 
for  payment,  to  he  sullicient,  must  1h>  nuide: 

1.  \iy  the  holder,  or  hy  some  person  authorized  to  receive  payment 
on  his  behalf; 

2.  At  a  reasonable  hour  on  a  business  day; 

3.  At  a  proper  place  as  herein  defined ; 

4.  To  the  person  primarily  liable  on  the  instrument,  or  if  he  is 
absent  or  inaccessible,  to  any  person  found  at  the  place  wliere  the  pre- 
sentment is  made. 

§  133.  Place  of  presentment. —  Presentment  for  payment  is  made 
at  the  proper  place. 

1.  Where  a  place  of  pajTnent  is  specified  in  the  instrument  and  it 
is  there  presented ; 

2.  Where  no  place  of  payment  is  specified,  but  the  address  of  the 
person  to  make  payment  is  given  in  the  instrument  and  it  is  there  pre- 
sented ; 

3.  Where  no  place  of  payment  is  specified  and  no  address  is  given  and 
the  instrument  is  presented  at  the  usual  place  of  business  or  residence 
of  the  person  to  make  paj'ment. 

4.  In  any  other*  ca.se  if  presented  to  the  person  to  make  paj-ment 
wherever  he  can  be  found,  or  if  presented  at  his  last  known  place  of 
business  or  residence. 

§  134.  Instrument  must  be  exhibited. —  Tlie  instnmient  must  be 
exhibited  to  the  person  from  whom  payment  is  demanded,  and  when  it 
is  paid  must  he  delivered  up  to  tlie  party  paying  it. 

§  135-  Presentment  where  instrument  payable  at  bank. — Where 
the  instrument  is  payable  at  a  bank,  presentment  for  j)ayment  must  be 
made  during  banking  hours,  unless  the  person  to  make  payment  has 
no  funds  there  to  meet  it  at  any  time  during  the  day,  in  whieli  case 
presentment  at  any  hour  before  the  bank  is  closed  on  that  day  is 
sutFicient. 

§  136.  Presentment  where  principal  debtor  is  dead. —  Where  the 
person  ])rimarily  liai)le  on  the  instrument  is  dead,  and  no  place  of 
payment  is  specified,  presentment  for  payment  must  be  made  to  bis 
personal  representative,  if  such  there  be,  and  if  with  the  exercise  of 
reasonable  diligence,  he  can  be  foinul. 

§  137.  Presentment  to  persons  liable  as  partners. —  Where  the 
persons  primarily  liable  on  the  instrument  are  liable  as  partners,  and 
no  place  of  payment  is  specified,  presentment  for  payment  may  be 
made  to  any  one  of  them,  even  though  there  has  been  a  dissolution  of  the 
firm. 


*  The   word   "  other "   omitted    from    the   New  York   statute   of    1S97 
tlirough  mistake  supplied  hy  Act  1898,  c.  336. 


362  THE    ^"EGOTIABLE    INSTRUMENTS    LAW.        ^^  138-148. 

§  138.  Presentment  to  joint  debtors.— Where  there  are  several 
persons  not  partners,  primarily  liable  on  the  instrument,  and  no  place 
of  payment  is  specitled,  presentment  must  be  made  to  them  all. 

§   139.  When  presentment  not  required  to  charge  the  drawer.— 

Presentment  for  payment  is  not  required. in  order  to  charge  the  drawer 
where  he  has  no  rifjht  to  expect  or  require  that  the  drawee  or  acceptor 
will  pay  the  instrument. 

§  140.  When  presentment  not  required  to  charge  the  indorser. 
—  Presentment  for  payment  is  not  required  in  order  to  charge  an  in- 
dorser where  the  instrument  was  made  or  accepted  for  his  accommoda- 
tion, and  he  has  no  reason  to  expect  that  the  instrument  will  be  paid 
if  presented. 

§  141.  When  delay  in  making  presentment  is  excused. —  Delay 
in  making  presentment  for  payment  is  excused  when  the  delay  is  caused 
by  circumstances  beyond  the  control  of  the  holder  and  not  imputable 
to  his  default,  misconduct,  or  Jiegligence.  When  the  cause  of  delay 
ceases  to  operate,  presentment  must  be  made  with  reasonable  diligence. 

§  142.  When  presentment  may  be  dispensed  with. —  Present 
ment  for  payment  is  dispensed  with: 

1.  Where,  after  the  exercise  of  reasonable  diligence,  presentment  as 
required  by  this  act  cannot  be  made ; 

2.  Where  the  drawee  is  a  fictitious  person; 

3.  By  waiver  of  presentment,  express  or  implied. 

§  143.  When  instrument  dishonored  by  non=payment. —  The  in- 
strument is  dishonored  by  non-payment  when: 

1.  It  is  duly  presented  for  payment  and  payment  is  refused  or  cannot 
be  obtained ;  or 

2.  Presentment  is  excused  and  the  instrument  is  overdue  and  unpaid. 

§  144.  Liability  of  person  secondarily  liable,  when  instrument 
dishonored. —  Subject  to  the  provisions  of  this  act,  when  the  instru- 
ment is  dishonored  by  non-payment,  an  immediate  right  of  recourse  to 
all  parties  secondarily  liable  thereon,  accrues  to  the  holder. 

§  145.  Time  of  maturity.— Every  negotiable  instrument  is  payable 
at  the  time  fixed  therein  without  grace.  When  the  day  of  maturity 
falls  upon  Sunday  or  a  holiday,  the  instrument  is  payable  on  the  next 
succeeding  business  day.  Instruments  falling  due  or  becoming  payable* 
on  Saturday  are  to  be  presented  for  payment  on  the  next  succeeding 
business  day,  except  that  instruments  payable  on  demand  may,  at  the 
option  of  the  holder,  be  presented  for  payment  before  twelve  o'clock 
noon  on  Saturday  when  that  entire  day  is  not  a  holiday. 

§  146.  Time;  how  computed.— Where  the  instrument  is  payable 
at  a  fixed  period  after  date,  .after  sight,  or  after  the  happening  of  a 
specified  event,  the  time  of  payment  is  determined  by  excluding  the 
day  from  which  the  time  is  to  begin  to  run,  and  by  including  the  date 
of  payment. 

§  147.  Rule  where  instrument  payable  at  bank.— Where  the  in- 
strument is  made  payable  at  a  bank  it  is  equivalent  to  an  order  to  the 
bank  to  pay  the  same  for  the  account  of  the  principal  debtor  thereon. 

§  148.  What  constitutes  payment  in  due  course.— Payment  is 
made  in  due  course  when  it  is  made  at  or  after  the  maturity  of  the 
instrument  to  the  holder  thereof  in  good  faith  and  without  notice  that 
his  title  is  defective. 

*  The  words  "  or  becoming  payable  "  were  added  by  Laws  N.  Y.  1898, 
c.  33G.     They  are  not  in  the  statute  in  the  other  States. 


§§  100,  lUl.       Tllli    ^•EGOTIAllLE    INSTRUMENTS    LAW.  363 

ARTICLE  VIII.' 
Notice  of  Dishonor. 

Section   100.  To  wliom  notice  of  dislionor  must  be  given. 
Kil.  By  whom  jriven. 
1G2.  Notice  given  by  agent. 
1G3.  Effect  of  notice  given  on  behalf  of  holder. 
104.  Kdect  where  notice  is  given  by  party  entitled  thereto. 
1()5.  When  agent  may  give  notice. 
IGG.  When  notice  sufTiciont. 
1G7.  Form  of  notice. 
1G8.  To  whom  notice  may  be  given. 
IGD.  Notice  where  party  is  dead. 

170.  Notice  to  partners. 

171.  Notice  to  persons  jointly  liable. 

172.  Notice  to  bankrupt. 

173.  Time  witiiin  which  notice  must  be  given. 

174.  Where  parties  reside  in  same  place. 

175.  Where  parties  reside  in  different  places. 

17G.  When  sender  deemed  to  have  given  due  notice. 

177.  Deposit  in  post-ofTice,  what  constitutes. 

178.  Notice  to  subsequent  parlies,  time  of. 
17!).  Where  notice  must  be  sent. 

180.  Waiver  of  notice. 

181.  Whom  affected  by  waiver. 

182.  Waiver  of  protest. 

183.  \Micn  notice  dispensed  with. 

184.  Delay  in  giving  notice;  how  excused. 

185.  When  notice  need  not  be  given  to  drawer. 
18G.  When  notice  need  not  be  given  to  indorser. 

187.  Notice   of  non-payment  where  acceptance   refused. 

188.  Effect  of  omission   to  give  notice   of  non-acceptance. 

189.  When  protest  need  not  be  made;  when  must  be  made. 

§  i6o.  To  whom  notice  of  dishonor  must  be  given. —  Except  as 
herein  otherwise  provided,  when  a  negotiable  instrument  has  been  dis- 
honored by  non-acce])tancc  or  non-payment,  notice  of  dishonor  must  be 
given  to  the  drawer  and  to  each  indorser,  and  any  drawer  or  indorser 
to  whom  such  notice  is  not  given  is  discharged. 

§  i6i.  By.  whom  given. —  The  notice  may  be  given  by  or  on  behalf 
of  the  holder,  or  by  or  on  behalf  of  any  party  to  the  instrument  who 
might  be  compelled  to  pay  it  to  the  holder,  and  who,  upon  taking   it 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3392-3421;  Colorado,  Connecticut, 
District  of  Columbia,  Florida,  Iowa,  ilassachusetts.  New  Jersey.  North 
Carolina,  Nortli  Dakota,  Oregon,  Pennsylvania,  Tennessee,  Utah,  Vir- 
ginia, and  Washington,  89-118;  Afaryland.  108-137;  Ohio,  31 74(7-3 175t; 
Ehodo  Island,  97-12G;   Wisconsin,  lii78-19  to   1078-48. 


364  THE    XECiOTIABLE    INSTRUMENTS    EAW.        §§  1G2-173, 

up,  would  have  a  right  to  reimbursement  from  the  party  to  whom  the 
notice  is  given. 

§  162.  Notice  given  by  agent.— Notice  of  dishonor  may  be  given 
by  an  agent  either  in  his  own  name  or  in  the  name  of  any  party  entitled 
to  give  notice,  whetlier  that  party  be  his  principal  or  not. 

§  163.  Effect  of  notice  given  on  behalf  of  holder.— Where  no- 
tice is  given  by  or  on  belialf  of  the  holder,  it  inures  for  the  benefit  of 
all  subsequent  lioldcrs  and  all  prior  parties  who  have  a  right  of  recourse 
against  the  party  to  whom  it  is  given. 

§   164.  Effect  where  notice  is  given  by  party  entitled  thereto.— 

Where  notice  is  given  by  or  on  behalf  of  a  party  entitled  to  give  notice, 
it  inures  for  tlie  benefit  of  the  holder  and  all  parties  subsequent  to  the 
party  to  whom  notice  is  given. 

§  165.  When  agent  may  give  notice.— Where  the  instrument  has 
been  dishonored  in  the  hands  of  an  agent,  he  may  either  himself  give 
notice  to  the  parties  liable  thereon,  or  he  may  give  notice  to  his  prin- 
cipal. If  he  give  notice  to  his  principal,  he  must  do  so  within  the  same 
time  as  if  he  were  the  holder,  and  the  principal,  upon  the  receipt  of 
such  notice,  has  himself  the  same  time  for  giving  notice  as  if  the  agent 
had  been  an  independent  holder. 

§  166.  When  notice  sufficient.— A  written  notice  need  not  be 
signed,  and  an  insufficient  written  notice  may  be  supplemented  and 
validated  by  verbal  communication.  A  misdescription  of  the  instrument 
does  not  vitiate  the  notice  unless  the  party  to  whom  the  notice  is 
given  is  in  fact  misled  thereby. 

§  167.  Form  of  notice. — The  notice  may  be  in  writing  or  merely 
oral,  and  may  be  given  in  any  terms  which  sufficiently  identify  the 
instrument,  and  indicate  that  it  has  been  dishonored  by  non-acceptance 
or  non-payment.  It  may  in  all  cases  be  given  by  delivering  it  personally 
or  through  the  mails. 

§  168.  To  whom  notice  may  be  given.— Notice  of  dishonor  may 
be  given  either  to  the  party  himself  or  to  his  agent  in  that  behalf. 

§  169.  Notice  where  party  is  dead.— When  any  party  is  dead,  and 
his  death  is  known  to  the  party  giving  notice,  the  notice  must  be 
given  to  a  personal  representative,  if  there  be  one,  and  if  with  rea- 
sonable diligence  he  can  be  found.  If  there  be  no  personal  representa- 
tive, notice  may  be  sent  to  the  last  residence  or  last  place  of  business 
of  the  deceased. 

§  170.  Notice  to  partners. — Where  the  parties  to  be  notified  are 
partners,  notice  to  any  one  partner  is  notice  to  the  firm,  even  though 
there  has  been  a  dissolution. 

§  171.  Notice  to  persons  jointly  liable.— Notice  to  joint  parties 
who  are  not  partners  must  be  given  to  each  of  them,  unless  one  of 
them  has  authority  to  receive  such  notice  for  the  others. 

§  172.  Notice  to  bankrupt.— Where  a  party  has  been  adjudged  a 
bankrupt  or  an  insolvent,  or  has  made  an  assignment  for  the  benefit  of 
creditors,  notice  may  be  given  either  to  the  party  himself  or  to  his 
trustee  or  assignee. 

§  173.  Time  within  which  notice  must  be  given. —  Notice  may 
be  given  as  soon  as  the  instrument  is  dishonored:  and  unless  delay  is 
excused  as  hereinafter  provided,  must  be  given  within  the  times  fixed 
by  this  act. 


;§  174-181.       TlIK    XEGOTIAIJLl-:    IN.STKLMKNTS    LAW. 


'.](',: 


§  174.  Where  parties  reside  in  same  place.— Where  the  person 
giving  and  the  |)i-r>un  to  receivo  nolict,-  reside  in  the  same  place,  notice 
must  be  given  within  tlie  following  times: 

1.  If  given  at  the  place  of  business  of  the  person  to  receive  notice, 
it  must  be  given  In-fore  the  close  of  business  hours  on  the  day  fol- 
lowing; .  ,    ,         i,  ,  , 

2.  If  given  at  his  residence,  it  must  be  given  before  the  usual  hours 

of  rest  on  the  day  following; 

3.  If  sent  by  mail,  it  must  be  deposited  in  tlie  post-office  in  time 
to  reach  him  in  usual  course  on  the  day  following. 

S  175.  Where  parties  reside  in  different  places.— Where  the 
person  giving  and  the  i)erson  to  receive  notice  reside  in  different 
places,  the  notice   must  be  given   within   the   following   times: 

1.  If  sent  by  mail,  it  must  be  deposited  in  the  post-oftice  in  time 
to  go  by  mail  the  day  following  the  day  of  dishonor,  or  if  there  be 
no  maifat  a  convenient  hour  on  that  day,  by  the  next  mail  thereafter. 

2.  If  given  otherwise  than  through  the  post-office,  then  within  the 
time  that  notice  would  have  been  received  in  due  course  of  mail,  if 
it  had  been  deposited  in  the  post-office  within  the  time  specified  in  the 
last  subdivision. 

§  176.  When  sender  deemed  to  have  given  due  notice.— Where 
notice  of  dishonor  is  duly  addressed  and  deposited  in  the  po.st-Oihce, 
the  .sender  is  deemed  to  have  given  due  notice,  notwithstanding  any 
miscarriage  in  the  mails. 

§  177.  Deposit  in  post=office;  what  constitutes.— Notice  is 
deemed  to  have  been  deposited  in  the  post-office  when  deposited  in  any 
branch  post-office  or  in  any  letter-box  under  the  control  of  the  Post- 
Office  Department. 

§  178.  Notice  to  subsequent  party;  time  of .— Where  a  party  re- 
ceives notice  of  di.shonor,  he  has,  after  the  receipt  of  such  notice,  the 
same  time  for  giving  notice  to  antecedent  parties  that  the  holder  has 
after  the  dishonor. 

§  179.  Where  notice  must  be  sent.— Where  a  party  has  added 
an  address  to  his  signature,  notice  of  dishonor  must  be  sent  to  that 
address;  but  if  he  has  not  given  such  address,  then  the  notice  must  be 
sent  as  follows: 

1.  Either  to  the  post-office  nearest  to  his  place  of  residence,  or  to 
the  post-office  where  he  is  accustomed  to  receive  his  letters;   or 

2.  If  he  live  in  one  place,  and  have  his  place  of  business  in  another, 
rotice  mav  be  sent  to  either  place;  or 

3.  If  he  is.  sojourning  in  another  place,  notice  may  be  sent  to  the 
l)lace  where  he  is  so  sojourning. 

But  where  the  notice  is  actually  received  by  the  party  within  the 
time  specified  in  this  act,  it  will  l)e  sufficient,  though  not  sent  in 
accordance  with  the  requirements  of  this  section. 

§  180.  Waiver  of  notice.—  Notice  of  dishonor  may  be  waived, 
either  l)efore  the  time  of  giving  notice  has  arrived  or  after  the  omis- 
sion to  give  due  notice,  and  the  waiver  may  be  express  or  implied. 

§  181.  Whom  affected  by  waiver.— Where  the  waiver  is  embodied 
in  the  instrument  itself,  it  is  binding  upon  all  parties;  but  where  it 
is  written  above  the  signature  of  an  indorser,  it  binds  him  only. 


3GG         THE  >;egotiable  kxstkumexts  law,      §§  182-lSO. 

§  182.  Waiver  of  protest. —  A  waiver  of  protest,  wliether  in  the 
case  of  a  foreign  bill  of  exchange  or  other  negotiable  instrument,  is 
deemed  to  be  a  waiver  not  only  of  a  formal  protest,  but  also  of  pre- 
sentment and  notice  of  dishonor. 

§  183.  When  notice  is  dispensed  with.— Notice  of  dishonor  is  dis- 
pensed with  when,  after  the  exercise  of  reasonable  diligence,  it  cannot 
be  given  to  or  does  not  reach  the  parties  sought  to  be  charged. 

§  184.  Delay  in  giving  notice;  how  excused.—  Delay  in  giving  no- 
tice of  dishonor  is  excused  when  the  delay  is  ciuised  by  circumstances 
beyond  the  control  of  the  holder  and  not  imputable  to  his  default,  mis- 
conduct or  negligence.  When  the  cause  of  delay  ceases  to  operate,  no- 
tice must  be  given  with  reasonable  diligence. 

§  185.  When  notice  need  not  be  given  to  drawer. — ^  Notice  of 
dishonor  is  not  required  to  be  given  to  the  drawer  in  either  of  the 
following  cases: 

1.  Where  the  drawer  and  drawee  are  the  same  person; 

2.  Where  the  drawee  is  a  fictitious  person  or  a  person  not  having 
capacity  to  contract; 

3.  Where  the  drawer  is  the  person  to  whom  the  instrument  is  pre- 
sented for  payment; 

4.  Where  the  drawer  has  no  right  to  expect  or  reqiiire  that  the 
drawee  or  acceptor  will  honor  the  instrument; 

5.  Where  the  drawer  has  countermanded  payment. 

§  186.  When  notice  need  not  be  given  to  indorser. —  Notice  of 
dishonor  is  not  required  to  be  given  to  an  indorser  in  either  of  the  fol- 
lowing cases: 

1.  Where  the  drawee  is  a  fictitious  person  or  a  p  rson  not  having 
capacity  to  contract,  and  the  indorser  was  aware  of  the  fact  at  the 
time  he  indorsed  the  instrument ; 

2.  Where  the  indorser  is  the  person  to  whom  the  instrument  is  pre- 
sented for  payment; 

3.  Where  the  instrument  was  made  or  accepted  for  his  accommoda- 
tion. 

§  187.  Notice  of  non=payment  where  acceptance  refused. — Where 
due  notice  of  dishonor  by  non-acceptance  has  been  given,  notice  of  a 
subsequent  dishonor  by  non-payment  is  not  necessary,  unless  in  the 
meantime  the  instrument  has  been  accepted. 

§  188.  Effect  of   omission   to   give    notice  of  non=acceptance. — 

An  omission  to  give  notice  of  dishonor  by  non-acceptance  does  not 
prejudice  the  rights  of  a  holder  in  due  course  subsequent  to  the 
omission. 

§  189.  When  protest  need  not  be  made;  when  must  be  made. — 

Where  any  negotiable  instrument  has  been  dishonored  it  may  be  pro- 
tested for  non  acceptance  or  non-payment,  as  the  case  may  be;  but 
protest  is  not  required,  except  in  the  case  of  foreign  bills  of  exchange. 


§§  200-202,        THE    XEGOTIAP.LK    IXSTKDMENTS    LAW.  oGT 

ARTICLE  IX/ 
Discharge   of   Negotiable    Instruments. 

Section  200.  Instrument;   liow  discluirged. 

201.  W'lion   person   secondarily   liable  on,  discharged. 

202.  Rij^lit  of  party   who   discharges   instrument. 
20.'}.  Konunciation   by   holder. 

204.  Cancellation;   unintentional;  burden  of  proof. 

205.  Alteration  of  instrument;   efTect  of. 
20(5.  What  constitutes  a  material  alteration. 

§  200.  Instrument;  how  discharged. t — A  negotiable  instrument  is 
discharged: 

1.  By  payment  in  due  course  by  or  on  behalf  of  the  principal  debtor; 

2.  By  payment  in  due  course  by  the  party  accommodated,  where  the 
instrument  is  made  or  accepted   for  accommodation; 

3.  By  the    intentional  cancellation  thereof  by  the   holder; 

4.  By  any  other  act  which  will  discharge  a  simple  contract  for  the 
payment  of  money ; 

5.  When  the  principal  debtor  becomes  the  holder  of  the  instrument 
at  or  after  maturity  in  his  own  right. 

§  20I.  When  person  secondarily  liable  on,  discharged. —  A  per- 
son secondarily  lial)le  on  the  iiistrunieiit  is  discharged: 

1.  By  any  act  which  discharges  the  instrument; 

2.  By   the   intentional   cancellation   of   his   signature   by   the   holder; 

3.  By  the  discharge  of  a  prior  party; 

4.  By  a  valid  tender  of  payment  made  by  a  prior  party; 

5.  By  a  release  of  the  principal  debtor,  unless  the  holder's  right  of 
recourse   against  the   party   secondarily   liable    is   expressly   reserved; 

G.  By  any  agreement  binding  uj)on  the  holder  to  extend  the  time 
of  payment  or  to  postpone  the  holder's  right  to  enforce  the  instru- 
ment,! unless  the  right  of  recourse  against  such  party  is  expressly 
reserved. 

§  202.  Right  of  party  who  discharges  instrument. —  Where  the 
instrument  is  paid  by  a  party  secondarily  liable  thereon,  it  is  tiot  dis- 
charged; but  the  party  so  paying  it  is  remitted  to  his  former  rights 
as  regards  all  prior  parties,  and  he  may  strjkc  out  his  own  and  all 
subsequent  indorsements,  and  again  negotiate  the  instnmient,  except: 

1.  Where  it  is  payable  to  the  order  of  a  third  person,  and  has  been 
paid  by  the  drawer;  and 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3422-3428;  Colorado,  Connecticut, 
District  of  Columbia,  Florida,  Towa.  ^Massachusetts,  Xew  Jersey.  North 
Carolina,  North  Dakota,  Oregon,  Pennsylvania.  Tennessee.  Utah.  Vir- 
ginia, and  Washington,  119-12;");  Marvland.  138-144;  Ohio,  317;');- 
3175p;  Rhode  Island,   127-133;   Wisconsin,   1679  to   1679-6. 

t  Through  an  error  in  enirrossing  the  words  in  the  headnote  have 
been  transposed.  It  was  intended  to  read,  "  How  instrument  dis- 
charged."    The  error  was  not  corrected  by  the  Act  of  1898. 

t  By  an  error  in  engrossing,  the  words  "  imless  made  with  tlie  as- 
sent of  the  party  secondarily  liable,  or  "  after  the  word  "  instrument  " 
are  omitted  in  the  New  York  Act.  They  were  not  supplied  bv  Laws 
1898.   c.   336. 


368  THE    NEGOTIABLE    lx\8TKUMKNTS    LAW.        §§  203-210. 

2.  Where  it  was  mode  or  accepted  for  accommodation,  and  has 
been  paid  by  the  party  accommodated. 

§  203.  Renunciation  by  holder, —  The  holder  may  expressly  re- 
nounce his  rights  against  any  party  to  the  instrument,  before,  at  or 
after  its  maturity.  An  absolute  and  unconditional  renunciation  of 
bis  rights  against  the  principal  debtor  made  at  or  after  the  maturity 
of  the  instrument,  discharges  the  instrument.  But  a  renunciation  does 
not  affect  the  rights  of  a  holder  in  due  course  without  notice.  A 
renunciation  must  be  in  writing,  unless  the  instrument  is  delivered  up 
to  the  person  primarily  liable  thereon. 

§  304.  Cancellation;  unintentional;  burden  of  proof. —  A  can- 
cellation made  unintentionally,  or  under  a  mistake,  or  without  the  au- 
thority of  the  holder,  is  inoperative;  but  where  an  instrument  or  any 
signature  thereon  api)ears  to  have  been  canceled  the  burden  of  proof 
lies  on  the  party  who  alleges  that  tlu  cancellation  was  made  unin- 
tentionally, or  under  a  mistake  or  without  authority. 

§  205.  Alteration  of  instrument;  effect  of. — Where  a  negotiable 
instrument  is  materially  altered  without  the  assent  of  all  parties  liable 
thereon,  it  is  avoided,  except  as  against  a  party  who  has  himself  made, 
authorized  or  assented  to  tlie  alteration  and  subsequent  indorsers.  But 
when  an  instrument  has  been  materially  altered  and  is  in  the  hands  of 
a  holder  in  due  course,  not  a  party  to  the  alteration,  he  may  enforce 
payment  thereof  according  to  its  original  tenor. 

§  206.  What  constitutes  a  material  alteration. —  Any  alteration 
which  changes: 

1.  The  date; 

2.  The  sum  payable,  either  for  principal  or  interest; 

3.  The  time  or  place  of  payment: 

4.  The  number  or  the  relations  of  the  parties; 

5.  The  medium  or  currency  in  which   payment  is  to  be  made; 

Or  which  adds  a  place  of  payment  where  no  place  of  payment  is 
specified,  or  any  other  change  or  addition  which  alters  the  effect  of 
the  instrument  in  any  respect,  is  a  material  alteration. 

ARTICLE  X.* 
Bills   of   Exchange;   Form   and    Interpretation. 

Section  210.  Bill  of  exchange  defined. 

211.  Bill  not  an  assignment  of  funds  in  hands  of  drawee. 

212.  Bill  addressed  to  more  than  one  drawee. 

213.  Inland  and  foreign  bills  of  exchange. 

214.  When  bill  may  be  treated  as  promissory  note. 

215.  Referee  in  case  of  need. 

§  210.  Bill  of  exchange  defined. — A  bill  of  exchange  is  an  uncbn- 
ditional   order   in  writing  addressed  by  one  person   to   another,  signed 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3429-3434;  Colorado,  Connecticut, 
District  of  Columbia,  Florida,  Iowa,  Massachusetts,  New  Jersey,  North 
Carolina,  North  Dakota,  Oregon,  Pennsylvania,  Tennessee,  Utah,  Vir- 
ginia, and  Washington,  126-131;  Maryland.  HS-l.'iO;  Ohio,  3175g- 
3175v;  Rhode  Island,  134-139;   Wisconsin,  1680  to  1680e. 


§§  211-220.       THK    NEGOTIABLE    INSTRUMENTS    LAW.  3G0 

by  the  person  giving  it,  requiring  the  person  to  whom  it  is  addressed 
to  pay  on  demand  or  at  a  fixed  or*  determinable  future  time  a  auni 
certain  in  money  to  order  or  to  bearer. 

§  211.  B:ll   not  an  assignment  of  funds  in   hands  of  drawee. — 

A  bill  of  itself  doen  not  operate  a.s  an  assignment  of  the  funds  in  the 
hands  of  the  drawee  available  for  the  payment  thereof,  and  the  drawee 
is  not  liable  on  the  bill  unless  and  until  he  aecepts  the  same. 

§  212.  Bill  addressed  to  more  than  one  drawee.— A  bill  may  be 
addressed  to  two  or  more  drawees  jointly,  whether  they  are  partners 
or  not;  but  not  to  two  or  more  drawees  in  the  alternative  or  in  suc- 
cession. 

§  213.  Inland  and  foreign  bills  of  exchange. —  An  inland  bill  of 
exchange  is  a  bill  whieli  is,  or  on  its  face  purports  to  be,  both  drawn 
and  payable  within  the  State.  Any  other  bill  is  a  foreign  bill.  Unless 
the  contrary  appears  on  the  face  of  the  bill,  the  holder  may  treat 
it  as  an  inland  bill. 

§  214.  When  bill  may  be  treated  as  promissory  note. —  Where 
in  a  bill  the  drawer  and  drawee  are  the  same  person,  or  where  the 
drawee  is  a  fictitious  person,  or  a  person  not  having  capacity  to  con- 
tract, the  holder  may  treat  the  instrument,  at  his  option,  either  as  a 
bill  of  exchange  or  a  promissory  note. 

§  215.  Referee  in  case  of  need.— Tlie  drawer  of  a  bill  and  any  iu- 
dorser  may  insert  thereon  the  name  of  a  person  to  whom  the  holder 
may  resort  in  case  of  need,  that  is  to  say,  in  case  the  bill  is  dishonored 
by  non-acceptance  or  non-payment.  Such  person  is  called  the  referee 
in  case  of  need.  It  is  in  the  option  of  the  holder  to  resort  to  the 
referee  in  case  of  need  or  not,  as  he  may  see  fit. 

ARTICLE  XI. t 
Acceptance  of  Bills  of  Exchange. 

Section  220.  Acceptance,   liow   made,    et    cetera. 

221.  Holder  entitled   to  acceptance  on  face  of  bill. 

222.  Acceptance    by    separate    instrument. 

22.3.  Promise  to  accept;   when  equivalent  to  acceptance. 

224.  Time  allowed  drawee  to  accept. 

225.  Liability  of  drawee  retaining  or  destroying  bill. 

226.  Acceptance   of   incomplete  bill. 

227.  Kinds   of  acceptances. 

228.  What  constitutes  a  general  acceptance. 

229.  Qualified  acceptance. 

230.  Rights  of  parties  as  to  qualified  acceptance. 

§  220.  Acceptance;  how  made,  et  cetera. —  The  acceptance  of  a 
bill  is  the   signification  by   the   drawee  of   his   assent  to  the  order   of 

*  The  word  "  or "  omitted  in  the  original  New  York  statute  eup- 
■  plied  by  Laws  N.  Y.   1898,  c.   330. 

t  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3435-3445;  Colorado,  Connecticut, 
District  of  Columbia,  Florida,  Iowa,  ^lassachusetts.  New  Jersey,  North 
Carolina,  North  Dakota,  Oregon,  Pennsylvania,  Tennessee,  Utah,  Vir- 
einin.  nnd  Washino-fon.  132-142:  Mnrvland.  l.Tl  Kil  :  Ohio,  317oM>- 
3T7eif;  Rhode  Island,  140-150;  Wisconsin,  1680^  to  IGSOp. 
1>1 


370  THE    XEGOTIABLE    IXSTKUME^TS    LAW.        §§  221-230.. 

the  drawer.  The  acceptance  must  be  in  writing  and  signed  by  the 
drawee.*  It  must  not  express  that  the  drawee  will  perform  his 
promise  by  any  other  means  than  the  payment  of  money. 

?  221.  Holder  entitled  to  acceptance  on  face  of  bill.— The  holder 
of  a  bill  presenting  the  same  for  acceptance  may  require  that  the  ac- 
ceptance be  written  on  the  bill,  and  if  such  request  is  refused,  may 
treat  the  bill  as  dishonored. 

§  222.  Acceptance  by  separate  instruntent. — Where  an  accept- 
ance is  written  on  a  paper  other  than  the  bill  itself,  it  does  not  bind 
the  acceptor,  except  in  favor  of  a  person  to  whom  it  was  shown  and 
who,  on  the  faith  thereof,  receives  the  bill  for  value. 

§  223.  Promise  to  accept;  when  equivalent  to  acceptance. —  An 

unconditional  promise  in  writing  to  accept  a  bill  before  it  is  drawn 
is  deemed  an  actual  acceptance  in  favor  of  every  person  who,  upon 
the  faith  thereof,  receives  the  bill  for  value. 

§  224.  Time  allowed  drawee  to  accept.—  The  drawee  is  allowed 
twenty-four  hours  after  presentment  in  which  to  decide  whether  or 
not  he  will  accept  the  bill;  but  the  acceptance  if  given  dates  as  of  the 
day  of  presentation. 

§  225.  Liability  of  drawee  retaining  or  destroying  bill.—  Where 
a  drawee  to  whom  a  bill  is  delivered  for  acceptance  destroys  the  same, 
or  refuses  within  twenty-four  hours  after  such  delivery,  or  within  such 
other  period  as  the  holder  may  allow,  to  return  the  bill  accepted  or 
non-accepted  to  the  holder,  he  will  be  deemed  to  have  accepted  the  same. 

§  226.  Acceptance  of  incomplete  bill. —  A  bill  may  be  accepted 
before  it  has  been  signed  by  the  drawer,  or  while  otherwise  incomplete, 
or  when  it  is  overdue,  or  after  it  has  been  dishonoi-ed  by  a  previous  re- 
fu.sal  to  accei)t,  or  by  non-])aymcnt.  But  when  a  bill  jiayablc  after 
sight  is  dishonored  by  non-acceptance  and  the  drawee  subsequently  ac- 
cepts it,  the  holder,  in  the  absence  of  any  different  agreement,  is  en- 
titled to  have  the  bill  accepted  as  of  the  date  of  the  first  presentment. 

§  227.  Kinds  of  acceptances.— An  acceptance  is  either  general  or 
qualified.  A  general  acceptance  assents  without  qualification  to  the 
order  of  the  drawer.  A  qualified  acceptance  in  express  terms  varies  the 
effect  of  the  bill  as  drawn. 

§  228.  What  constitutes  a  general  acceptance. —  An  acceptance 
to  pay  at  a  particular  place  is  a  general  acceptance  unless  it  expressly 
states  that  the  bill  is  to  be  paid  there  only  and  not  elsewhere. 

§  229.  Qualified  acceptance.— An  acceptance  is  qualified  which  is: 

1.  Conditional,  that  is  to  say,  which  makes  payment  by  the  ac- 
ceptor dependent  on  the   fulfillment  of  a  condition   therein   stated; 

2.  Partial,  that  is  to  say,  an  acceptance  to  pay  part  only  of  the 
amount  for  which  the  bill  is  drawn; 

3.  Local,  that  is  to  say,  an  acceptance  to  pay  only  at  a  particular 
place; 

4.  Qualified  as  to   time; 

5.  The  acceptance  of  some  one  or  more  of  the  drawees,  but  not  of  all. 

§  230.  Rights  of  parties  as  to  qualified  acceptance.—  The  holder 
may  refuse  to  take  a  qualified  acceptance,  and  if  he  does  not  obtain  an 
unqualified   acceptance,   he   may   treat   the   bill   as   dishonored  by   non- 

*  The  word  "  drawee  "  substituted  for  "  drawer  "  by  Laws  N.  Y.  1898, 
c.   336. 


§§  240-242.       THE    NEGOTIABLE    INSTRUMENTS    LAW.  371 

acceptance.  Where  a  qualified  acceptance  is  taken,  the  drawer  and 
indorsers  are  disoharj^ed  from  liability  on  the  bill,  unless  they  have 
expressly  or  inipiieiUy  authorized  the  lioldcr  to  take  a  qualified  ac- 
ce|)tan('e,  or  8ubH0([uently  assent  thereto.  When  the  drawer  or  an  in- 
dorser  receives  notice  of  a  qualified  acceptance,  he  must  witliin  a 
reasonable  time  express  his  dissent  to  the  holder,  or  he  will  be  deemed 
to  have  assented  tiiereto. 

ARTICLE  XII.* 

Presentment    of    Bills    of    Exchange    for    Acceptance. 

Section  240.  When  presentment  for  acceptance  must  be  made. 

241.  When  failure  to  present  releases  drawer  and  indorser. 

242.  Presentment ;   how  made. 

243.  On   what   days  presentment  may  be  made. 

244.  Presentment ;    where  time  is  insufficient. 
24.T.  \\'iien  presentment   is  excused. 

246.  When  dishonored  by  non-acceptance. 

247.  Duty  of  holder  where  bill   not   accepted. 

248.  Rij^hts  of  holder  where  bill  not  accepted. 

§  240.  When  presentment  for  acceptance  must  be  made. —  Pre- 
sentment for   acceptance  must  be  made: 

1.  Where  the  bill  is  payable  after  sight  or  in  any  other  case  where 
presentment  for  acceptance  is  necessary  in  order  to  fix  the  maturity 
of  the  instrinuent :   or 

2.  Where  the  bill  expressly  stipulates  that  it  shall  be  presented  for 
acceptance ;  or 

3.  Where  tlie  bill  is  drawn  payable  elsewhere  than  at  the  residence 
or  place  of  business  of  the  drawee. 

In  no  other  case  is  presentment  for  acceptance  necessary  in  order 
to  render  any  party  to  the  bill  liable. 

§  241.  When  failure  to  present  releases  drawer  and  indorser. — 

Except  as  herein  otherwise  provided,  the  holder  of  a  bill  which  is  re- 
quired by  the  next  preceding  section  to  be  presented  for  acceptance  must 
either  present  it  for  acceptance  or  negotiate  it  within  a  reasonable 
time.     If  he  fails  to  do  so,  the  drawer  and  all  indorsers  are  discharged. 

§  242.  Presentment;  how  made. —  Presentment  for  acceptance 
must  be  made  by  or  on  behalf  of  the  holder  at  a  reasonable  hour,  on  a 
business  day,  and  before  tlie  bill  is  overdue,  to  the  draweet  or  some 
person   authorized   to   accept  or   refuse   acceptance  on   his   behalf;    and 

1.  Where  a  bill  is  addressed  to  two  or  more  drawees  who  are  not 
partners,  presentment  must  be  made  to  them  all,  unless  one  has   au- 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3446-3454:  Colorado,  Connecticut, 
District  of  Columbia,  Florida.  Iowa.  Massachusetts,  New  Jersey.  North 
Carolina.  North  Dakota,  Oregon.  Pennsylvania,  Tennessee,  l"tah,  Vir- 
ginia, and  Washington,  1 4.3-1. "i  1  :  Marvland.  102-170:  Ohio.  3\76g- 
31760 ;   Rhode  Island.   ir>I-l.iO:    Wisconsin,   1681    to   1G81-8. 

t  The  word  "'  drawee "  substituted  for  ''  drawer "  by  Laws  N.  Y. 
1898,  c.  336. 


372  THE    NEGOTIABLE    IXSTEUMEXTS    LAW.        §§  243-248. 

thority  to  accept   or  refuse  acceptance  for  all,  in  which  case  present- 
ment may  be  made  to  him  only; 

2.  Where  the  drawee  is  dead,  presentment  may  be  made  to  his  per- 
sonal representative; 

3.  Where  the  drawee  has  been  adjudged  a  bankrupt  or  an  insol- 
vent, or  has  made  an  assignment  for  the  benefit  of  creditors,  pre- 
sentment may  be  made  to  him  or  to  his  trustee  or  assignee. 

§  243.  On  what  days  presentment  may  be  made. —  A  bill  may 
be  presented  for  acceptance  on  any  day  on  which  negotiable  instru- 
ments may  be  presented  for  payment  under  the  provisions  of  sections 
one  hundred  and  thirty-two^  and  one  hundred  and  forty-livef  of  this 
act.  When  Saturday  is  not  otherwise  a  holiday,  presentment  for 
acceptance  may  be  made  before  twelve  o'clock  noon  on  that  day. 

§  244.  Presentment  when  time  is  insufficient. — Where  the  holder 
of  a  bill  drawn  payable  elsewhere  than  at  the  place  of  business  or  the 
lesidence  of  the  drawee  has  not  time  with  the  exercise  of  reasonable 
diligence  to  present  the  bill  for  acceptance  before  presenting  it  for 
payment  on  the  day  that  it  falls  due,  the  delay  caused  by  presenting 
the  bill  for  acceptance  before  presenting  it  for  payment  is  excused  and 
does  not  discharge  the  drawers  and  indorsers. 

§  245.  Where  presentment  is  excused. —  Presentment  for  accept- 
ance is  excused  and  a  bill  may  be  treated  as  dishonored  by  non-accept- 
ance in  cither  of  the  following  cases: 

1.  Wiiere  the  drawee  is  dead  or  has  absconded,  or  is  a  fictitious 
person  or  a  person  not  having  capacity  to  contract  by  bill; 

2.  Where  after  the  exercise  of  reasonable  diligence,  presentment 
cannot  be  made; 

3.  Where,  although  presentment  has  been  irregular,  acceptance  has 
been  refused  on  some  other  ground. 

§  246.  When  discharged  by  non=acceptance. — A  bill  is  dishonored 
by  non-acceptance : 

1.  When  it  is  duly  presented  for  acceptance,  and  such  an  accept- 
ance as  is  prescribed  by  this  act  is  refused  or  cannot  be  obtained;   or 

2.  When  presentment  for  acceptance  is  excused  and  the  bill  is  not 
accepted. 

§  247.  Duty  of  holder  where  bill  not  accepted. —  Where  a  bill  is 
duly  presented  for  acceptance  and  is  not  accepted  within  the  prescribed 
time,  the  person  presenting  it  must  treat  the  bill  as  dishonored  by 
non-acceptance  or  he  loses  the  right  of  recourse  against  the  drawer  and 
indorsers. 

§  248.  Rights  of  holder  where  bill  not  accepted. — When  a  bill  is 
dishonored  by  non-acceptance,  an  immediate  right  of  recourse  against 
the  drawers  and  indorsers  accrues  to  the  holder,  and  no  presentment 
for  payment  is  necessary. 

*  Number  "  one  hundred  and  thirty-two "  substituted  for  seventy- 
two  by  Laws   1898,  c.  336. 

t  Number  "  one  hundred  and  forty-five "  substituted  for  eighty-five. 
(Id.) 


§§  260-2G4.     THE  xegotiaulk  instul.mk.xt.s  law.         oi6 

ARTICLE  Xni.* 
Protest  of  Bills  of  Exchange. 

Section  260.  In   what   cases   protest   necessary. 

201.  Protest;   how  made. 

202.  Protest;  by  whom  made. 
20.3.  Protest;   wlien  to  be  made. 

204.  Protest;    where   made. 

205.  Protest  both  for  non-acceptance  and  non-payment. 
260.  Protest  before  Jimturity  where  acceptor  insolvent. 
207.  Wlien  protest  dispensed  with. 

268.  Protest;   where  bill   is  lost,   et  cet«ra. 

§  260.  In  what  cases  protest  necessary.— Where  a  foreign  bill  ap- 
pearing on  its  fucc  to  be  such  is  dishonored  by  non-acceptance,  it  must 
be  duly  protested  for  non-acceptance,  and  where  such  a  bill  which  haa 
not  previously  been  dishonored  by  non-aceeotance  is  dishonored  by 
non-payment. 'it  must  be  duly  protested  for  non-payment.  If  it  is  not 
90  protested,  the  drawer  and  indorsers  are  discluuged.  Where  a  bill 
does  not  ajjpear  on  its  face  to  be  a  foreign  bill,  protest  thereof  in 
case  of  dishonor  is  unnecessary. 

§  261.  Protest;  how  made.—  The  protest  must  be  annexed  to  the 
bill,  or  liiust  contain  a  opy  thereof,  and  must  be  under  the  hand  and 
seal  of  the  notary  making  it.  and  must  specify: 

1.  The  time  and  place  of  presentment; 

2.  The  fact  that  presentment  was  made  and  the  manner  thereof; 

3.  The  cause   or   reason  for  protesting  the   bill; 

4.  The  demand  made  and  the  answer  given,  if  any,  or  the  fact  that 
the  drawee  or  acceptor  could  not  be  found. 

§  262.  Protest;  by  whom  made.— Protest   may  be  made  by: 

1.  A  notary  jniblic;   or 

2.  By  any  respectable  resident  of  the  place  where  the  bill  is  dis- 
honored, in  the  presence  of  two  or  more  creditable  witnesses. 

§  263.  Protest;  when  to  be  made.— When  a  bill  is  protested,  such 
protest  must  be  made  on  the  day  of  its  dishonor,  unless  delay  is  ex- 
cused as  herein  provided.  When  a  bill  has  been  duly  noted,  the  pro- 
test may  be  subsequently  extended  as  of  the  date  of  the  noting. 

§  264.  Protest;  where  made.— A  bill  must  be  protested  at  the 
place  where  it  is  di>lionored,  except  that  when  a  bill  drawn  payable 
at  the  place  of  business  or  residence  of  some  person  other  than  the 
drawee,  has  been  dishonored  by  non-acceptance,  it  must  be  protested 
for  non-payment  at  the  place  where  it  is  expressed  to  be  payable,  and 
no  further  presentment  for  payment  to.  or  demand  on.  the  drawee  is 
necessarj'. 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3455-3463;  Colorado.  Connecticut, 
District  of  Columbia,  Florida,  Iowa,  Massachusetts,  New  Jersey,  North 
Carolina.  North  Dakota,  Oretron,  Pennsylvania,  Tennessee,  Utah.  ^  ir- 
cinia.  and  Washington.  152-160;  Maryland.  171-170:  Ohio.  3176p- 
3176x;  Rhode  island.   160-168;   Wisconsin.   1681-9  to   1681-17. 


374  THE    XEGOTIABLE    IXSTKUMENTS    LAW.        §§  265-280. 

§  265.  Protest   both   for   non=acceptance   and   non=payment. —  A 

bill  wiiic-h  has  beon  piotestod  for  iiuii-aoccptaiiCL'  may  be  subsfquently 
protested  for  non-pay lueiit. 

§  266.  Protest    before    maturity    >yhere    acceptor    insolvent.— 

Where  the  acci^ptor  lias  been  adjudged  a  bankrupt  or  an  insolvent,  or 
has  made  an  assignment  for  the  benefit  of  creditors,  before  the  bill 
matures,  the  holder  may  cause  tlie  bill  to  be  protested  for  better  se- 
curity against  tlie  drawer  and  indorsers. 

§  267.  When  protest  dispensed  with. —  Protest  is  dispensed  with 
by  any  circumstances  which  would  dispense  with  notice  of  dishonor. 
Delay  in  noting  or  protesting  is  excused  when  delay  is  caused  by  cir- 
cumstances bej'ond  the  control  of  the  holder  and  not  imputable  to  his 
default,  misconduct,  or  negligence.  When  the  cause  of  delay  ceases 
to  operate,  the  bill  must  be  noted  or  protested  with  reasonable  dili- 
gence. 

§  268.  Protest  where  bill  is  lost,  et  cetera. — ^  Where  a  bill  is  lost 
or  destroyed,  or  is  wrongly  detained  from  the  person  entitled  to  hold 
it,  protest  may  be  made  on  a  copy  or  written  particulars  thereof. 


ARTICLE  XIV.* 
Acceptance  of  Bills  of  Exchange  for  Honor. 

Sectio:^  280.  When  bill  may  be  accepted  for  honor. 

281.  Acceptance  for  honor;  how  made. 

282.  When  deemed  to  be  an  acceptance  for  honor  of  the  drawer. 

283.  Liability  of  acceptor  for  honor. 

284.  Agreement  of  acceptor  for  honor. 

285.  Maturity  of  bill  payable  after  sight;  accepted  for  honor. 

286.  Protest  of  bill  accepted  for  honor,  et  cetera. 

287.  Presentment    for    payment    to   acceptor    for    honor;    how 

made. 

288.  When  delay  in  making  presentment  is  excused. 

289.  Dishonor  of  bill  by  acceptor  for  honor. 

§  280.  When  bill  may  be  accepted  for  honor. —  Where  a  bill  of 
exchange  has  l)een  protested  for  dishonor  by  non-acceptance  or  pro- 
tested for  better  security  and  is  not  overdue,  any  person  not  being  a 
party  already  liable  thereon  may,  with  the  consent  of  the  holder,  in- 
tervene and  accept  the  bill  supra  protest  for  the  honor  of  any  party 
liable  thereon  or  for  the  honor  of  the  person  forf  whose  account  the 
bill  is  drawn.  The  acceptance  for  honor  may  be  for  part  only  of  the 
sum  for  which  the  bill  is  drawn;  and  where  there  has  been  an  accept- 
ance for  honor  for  one  party,  there  may  be  a  further  acceptance  by  a 
different  person  for  the  honor  of  another  party. 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  .3464-.'}473 ;  Colorado,  Connecticut, 
District  of  Columbia,  Florida,  Iowa,  Massachusetts,  New  Jersey,  North 
Carolina,  North  Dakota,  Oregon,  Pennsylvania,  Tennessee,  Utah,  Vir- 
ginia, and  Washington,  101-170;  Maryland,  180-189;  Ohio.  3176j/- 
3177.r/;   Rhode  Island,   169-178;    Wisconsin,   1G81-18  to   1G81-27. 

t  The  word  "  for  "  omitted  in  the  original  New  York  Act  supplied 
by  Laws  1898,  c.  336. 


|§  281-289.        THE    NEGOTIA15LE    IXSTKL-.M  E.NTS    I.AW.  375 

§  281.  Acceptance  for  honor;  how  made.— An  acceptance  for 
honor  supra  protest  must  be  in  writing  and  indicate  that  it  is  an  ac- 
ceptance for  honor,  and  must  be  signed  by  the  acceptor  for  lionor. 

§  282.  When  deemed  to  be  an  acceptance  for  honor  of  the 
drawer.  \\tici<-  an  acceptance  fur  Imnor  does  not  expressly  state  for 
whose  lionor  it  is  made,  it  is  deemed  to  be  an  acceptance  for  the  honor 
of  the  drawer. 

§  283.  Liability  of  acceptor  for  honor.—  The  acceptor  for  honor 
is  liable  t(i  tlie  hnldci-  ami  to  all  i)arties  to  the  bill  subsequent  to  thu 
party  for  whose  honor  he  has  accepted. 

§  284.  Agreement  of  acceptor  tor  honor.— The  acceptor  for  honor 
by  such  acceptance  engages  that  he  will  on  due  presentment  pay  the 
bill  according  to  the  terms  of  his  acceptance,  provided  it  shall  not 
have  been  jiaid  by  the  drawee,  and  provided  also  that  it  shall  have 
been  duly  presented  for  payment  and  protested  for  non-payment  and 
notice  of  dishonor  given  to  him. 

§    285.  Maturity  of  bin  pavable  after  sijjht;  accepted  for  honor. 

—  Where  a  bill  payable  after  sight  is  accepted  for  honor,  its  maturity 
is  calculated,  from' the  date  of  the  noting  for  non-acceptance  and  not 
from  the  date  of  the  acceptance  for  honor. 

§  286.  Protest  of  bill  accepted  for  honor,  et  cetera.— Where  a 
dishonored  bill  has  been  accepted  for  honor  supra  i)rotest  or  contains 
a  reference  in  case  of  need,  it  must  be  protested  for  non-payment  before 
it  is  presented  for  payment  to  the  acceptor  for  honor  or  referee  in 
•case  of  need. 

§  287.  Presentment  for  payment  to  acceptor  for  honor;  how 
made. —  Presentment  for  payment  to  the  acceptor  for  honor  must  be 
made  as  follows: 

1.  If  it  is  to  be  presented  in  the  place  where  the  protest  for  non- 
payment was  made,  it  must  be  presented  not  later  than  the  day  fol- 
lowing its  maturity; 

2.  If  it  is  to  be  presented  in  some  other  place  than  the  place  where 
it  was  protested,  then  it  must  be  forwarded  within  the  time  specified 
in  section  one  hundred  and  seventy-five.* 

$  288.  When  delay  in  making  presentment  is  excused. —  The 
provisions  of  section  one  hundred  and  foity-onet  apply  where  there  13 
delay  in  making  presentment  to  the  acceptor  for  honor  or  referee  in 
case  of  need. 

§  289.  Dishonor  of  bill  by  acceptor  for  honor.— When  the  bill  ii 
dishonored  by  the  acceptor  for  honor  it  must  be  protested  for  non- 
payment by  him. 

*  Number  one  hundred  and  seventy-five  substituted  for  one  hundred 
and  four  by  Laws  N.  Y.  1898,  c.  33G. 

7  Number  one  hundred  and  fortv-one  substituted  for  eighty-one  by 
Laws  N.  Y.  1898,  c.  336. 


376  THE    NEGOTIABLE    IXSTKUMEXTS    LAW.        §§  300-306. 

ARTICLE  XV.* 
Payment  of  Bills  of  Exchange  for  Honor. 

Section  300.  Who  may  make  payment  for  honor. 

301.  Payment  for  honor;   '.ow  made. 

302.  Dedaration  before  payment  for  honor. 

303.  Preference  of  parties  ottering  to  pay  for  honor. 

304.  Effect  on  .subsequent  parties  where  bill  is  paid  for  honor. 

305.  Where   holder  refuses  to   receive  payment  supra   protest. 

306.  Rights  of  payer  for  honor. 

§  300.  Who  may  make  payment  for  honor. —  Where  a  bill  has 
been  protested  for  non-payment,  any  person  may  intervene  and  pay  it 
supra  protest  for  the  honor  of  any  person  liable  thereon  or  for  the 
honor  of  the  person  for  whose  account  it  was  drawn. 

§  30I.  Payment  for  honor;  how  made.— The  payment  for  honor 
supra  protest  in  order  to  operate  as  such  and  not  as  a  mere  voluntary 
pajTnent  must  be  attested  by  a  notarial  act  of  honor,  which  may  be 
appended  to  the  protest  or  form  an  extension  to  it. 

§  302.  Declaration  before  payment  for  honor. —  The  notarial  act 
of  honor  must  be  founded  on  a  declaration  made  by  the  payer  for 
honor,  or  by  his  agent  in  that  behalf  declaring  his  intention  to  pay  the 
bill  for  honor  and  for  whose  honor  he  pays. 

§  303.  Preference  of  parties  offering  to  pay  for  honor.—  Where 
two  or  more  persons  offer  to  pay  a  bill  for  the  honor  of  different  par- 
ties, the  person  whose  payment  will  discharge  most  parties  to  the  bill 
is  to  be  given  the  preference. 

§  304.  Effect  on  subsequent  parties  where  bill  is  paid  for 
honor. —  Where  a  bill  has  been  paid  for  honor  all  parties  subsequent 
to  the  party  for  whose  honor  it  is  paid  are  discharged,  but  the  payer 
for  honor  is  subrogated  for,  and  succeeds  to,  both  the  rights  and  duties 
of  the  holder  as  regards  the  party  for  whose  honor  he  pays  and  all 
parties  liable  to  the  latter. 

§  305.  Where  holder  refuses  to  receive  payment  supra  protest. 

—  Where  the  holder  of  a  bill  refuses  to  receive  payment  supra  pro- 
test, he  loses  his  right  of  recourse  against  any  party  vv'ho  would  have 
been  discharged  by  such  payment. 

§  306.  Rights  of  payer  for  honor.—  The  payer  for  honor,  on  pay- 
ing to  the  holder  the  amount  of  the  bill  and  the  notarial  expenses  in- 
cidental to  its  dishonor,  is  entitled  to  receive  both  the  bill  itself  and 
the  protest. 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3474-3480;  Colorado,  Connecticut. 
District  of  Columbia,  Florida,  Iowa,  Massachusetts,  New  Jersey,  North 
Carolina,  North  Dakota,  Oregon,  Pennsylvania,  Tennessee,  Utah,  Vir- 
ginia, and  Washington,  171-177;  Maryland,  lOO-lOG;  Ohio,  3177/i- 
3177n;  Rhode  Island,  179-185;   Wisconsin,  1081-28  to  1681-34. 


§§310-315.        TllK    .\K<iOTlA15LE    INSTUUMENTS    LAW.  oil 

ARTICLE  XVI.* 

Bills  in  a  Set. 

Section  310.  Bills  in  sets  constitute  ono  Ijill. 

311.  Rights  of  holders  wliorc  cliiTorcnt  parts  are  ncRotiated. 

312.  Liability  of  holder  who  indorses  two  or  more  parts  of  a 

set  to  different  persons. 

313.  Aeeeptance  of  bills  drawn  in  sets. 

314.  Payment  by  acceptor  of  bills  drawn  in  sets. 

315.  Effect  of  discharging  one  of  a  set. 

§  ^lo  Bills  in  sets  constitute  one  bill.— Where  a  bill  is  drawn  in 
a  set,  each  part  of  the  set  being  numbered  and  containing  a  reference 
to  the  other  parts,  the  whole  of  the  parts  constitute  one  bill. 

§  311.  Rights  of  holders  where  different  parts  are  negotiated. 
—  Where  two  or  more  parts  of  a  set  are  negotiated  to  different  liolders 
in  due  course,  the  holder  whose  title  first  accrues  is  as  between  such 
holders  the  true  owner  of  the  bill.  But  nothing  in  this  section  affects 
the  rights  of  a  person  who  in  due  course  accepts  or  pays  the  part  first 
presented  to  him. 

§  312  Liability  of  holder  who  indorses  two  or  more  parts  of  a 
set  to  different  persons.— Where  the  holder  of  a  set  indorses  two  or 
more  parts  to  dillVrcnt  persons  he  is  liable  on  every  such  part,  and 
every  indorser  subsequent  to  him  is  liable  on  the  part  he  has  himself 
indorsed,  as  if  such  parts  were  separate  bills. 

§  313.  Acceptance  of  bills  drawn  in  sets.— The  acceptance  may 
be  written  on  any  part,  and  it  must  be  written  on  one  part  only.  If 
the  dro.wee  accepts  more  than  one  part,  and  such  accepted  parts  are 
negotiated  to  different  holders  in  due  course,  he  is  liable  on  every  such 
part  as  if  it  were  a  separate  bill. 

§  314.  Payment  by  acceptor  of  bills  drawn  in  sets.— When  the 
acceptor  of  a  bill  drawn  in  a  sot  pays  it  without  requiring  the  part 
bearing  his  acceptance  to  be  delivered  up  to  him,  and  that  part  at 
maturfty  is  outstanding  in  the  hands  of  a  holder  in  due  course,  he  is 
liable  to  the  holder  thereon. 

§  315.  Effect  of  discharging  one  of  a  set.— Except  as  herein  other- 
wise provided,  where  any  one  part  ol  a  bill  drawn  in  a  set  is  discharged 
by  payment  or  otherwise  the  whole  bill   is  discharged. 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3481-348G;  Colorado,  Connecticut, 
District  of  Columbia.  Florida,  Iowa.  Massachusetts,  New  Jersey,  North 
Carolina,  North  Dakota.  Oregon.  Pennsylvania,  Tennessee.  Utah,  Vir- 
ginia and  Wasliington.  ITS-lS:?:  Maryland,  197-202;  Ohio,  3177o- 
Smi;  Rhode  Island,  186-191;   Wisconsin,  1681-35  to  1681-40. 


378  THE    NEGOTLiBLE    INSTRUMENTS    LAW.       ^§  320-325. 

ARTICLE  XVII.* 
Promissory  Notes  and  Checks. 

Section  320.  Promissory  note  defined. 

321.  Cheek   defined. 

322.  Within  what  time  a  check  must  be  presented. 

323.  Certification  of  check;    effect  of. 

324.  Effect  wliere  hoUler  of  check  procures   it  to  be  certified. 

325.  When  check  operates  as   an  assignment. 

§  320.  Promissory  note  defined.— A  negotiable  promissory  note 
■within  the  meaning  of  this  act  is  an  unconditional  promise  in  writing 
made  by  one  person  to  another,  signed  by  the  maker,  engaging  to  pay 
on  demand  or  at  a  fixed  or  determinable  future  time  a  sum  certain 
in  money  to  order  or  to  bearer.  Where  a.  note  is  drawn  to  the  maker's 
own  order,  it  is  not  complete  until  indorsed  by  him. 

§  321.  Check  defined. —  A  check  is  a  bill  of  exchange  drawn  on  a 
bank,  payable  on  demand.  Except  as  herein  otherwise  provided,  the 
provisions  of  this  act  applicable  to  a  bill  of  exchange  payable  on  de- 
mand apply  to  a  check. 

§  322.  Within  what  time  a  check  must  be  presented. —  A  check 
must  be  presented  for  payment  within  a  reasonable  time  after  its 
issue  or  the  drawer  will  be  discharged  from  liability  thereon  to  the 
extent  of  the  loss  caused  by  the  delay. 

§  323.  Certification  of  check;  effect  of.— Where  a  check  is  certi- 
fied by  the  bank  on  which  it  is  drawn  the  certificationt  is  equivalent 
to   an    acceptance. 

§  324.  Effect  where  the  holder  of  check  procures  it  to  be  cer- 
tified.—  Where  the  holder  of  a  check  procures  it  to  be  accepted  or 
certified  the  drawer  and  all  indorsers  are  discharged  from  liability 
thereon. 

§  325.  When  check  operates  as  an  assignment. — A  check  of  it- 
self does  not  operate  as  an  assignment  of  any  part  of  the  funds  to  the 
credit  of  the  drawer  with  the  bank,  and  the  bank  is  not  liable  to  the 
holder,  unless  and  until  it  accepts  or  certifies  the  check. 

*  The  numbers  of  the  sections  of  this  article  in  other  States  than 
New  York  are  as  follows:  Arizona,  3487-3491;  Colorado,  Connecticut, 
District  of  Columbia,  Florida,  Iowa,  Massachusetts,  New  Jersey,  North 
Carolina.  North  Dakota,  Oregon.  Pennsylvania,  Tennessee,  Utah,  Vir- 
ginia, and  W^ashington,  184-189;  Maryland.  203-208;  Ohio,  3177t<- 
3177-;  Rhode  Island,   192-197;  Wisconsin,  1684  to  1684-5. 

t  The  word  "certification"'  substituted  for  "certificate"  by  Laws 
N.  Y.  1898,  c.  336. 


§§  330-332.       TllK    NEGOTIAI5LK    INSTRUMENTS    LAW.  379 


ARTICLE  XVIII.' 

Notes    Given    for    Patent    Rights    and     for    a    Speculative    Con- 
sideration. 

Section  3.30.  Negotiable  instruments  given   for   patent  rights. 

331.  Negotiable  instruments  given  for  a  si)eculative  considera- 

tion. 

332.  How  negotiable  bonds  are  made  non-negotiable. 

§  330.  Negotiable     instruments    given     for     patent     rights. —  A 

promissory  note  or  other  negotiable  instrument,  tlie  consideration  of 
whicli  consists  wholly  or  partly  of  the  right  to  make,  use  or  sell  any 
invention  claimed  or  represented  by  the  vendor  at  tlie  time  of  sale  to 
be  patented,  must  contain  the  words  "given  for  a  patent  right"  prom- 
inently and  legibly  written  or  printed  on  the  face  of  such  note  or  in- 
strument above  the  signature  thereto;  and  such  note  or  instrument  in 
the  hands  of  any  purchaser  or  holder  is  subject  to  the  same  defenses 
as  in  the  hands  of  the  original  holder;  but  this  section  does  not  apply 
to  a  negotiable  instrument  given  solely  for  the  purchase  price  or  the 
use  of  a  patented  article. 

§  331.  Negotiable   instruments  for  a  speculative  consideration. 

—  If  the  consideration  of  a  promissory  note  or  other  negotiable  instru- 
ment consists  in  whole  or  in  part  of  the  purchase  price  of  any  farm 
product,  at  a  price  greater  by  at  least  four  times  than  the  fair  market 
value  of  tlie  same  product  at  the  time,  in  the  locality,  or  of  the  member- 
ship and  rights  in  an  association,  company  or  combination  to  produce 
or  sell  any  farm  product  at  a  fictitious  rate,  or  of  a  contract  or  bond 
to  purchase  or  sell  any  farm  product  at  a  price  greater  by  four  times 
than  the  market  value  of  the  same  product  at  the  time  in  the  locality, 
the  words,  "  given  for  a  speculative  consideration,"  or  other  words 
clearly  showing  the  nature  of  the  consideration,  must  be  prominently 
and  legibly  written  or  printed  on  the  face  of  such  note  or  instrument 
above  the  signature  thereof;  and  such  note  or  instrument,  in  the  hands 
of  any  purchaser  or  holder,  is  subject  to  the  same  defenses  as  in  the 
hands  of  the  original  owner  or  holder. 

§  332.  How    negotiable    bonds    are  made  non=negotiable. —  The 

owner  or  holder  of  any  corporate  or  municipal  bond  or  obligation 
(except  such  as  are  designated  to  circulate  as  money,  payable  to 
bearer),  heretofore  or  hereafter  issued  in  anil  payable  in  this  State, 
but  not  registered  in  pursuance  of  any  State  law,  may  make  such 
bond  or  obligation,  or  the  interest  coupon  accompanying  the  same, 
non-negotiable,  by  subscribing  his  name  to  a  statement  indorsed  thereon 
that  such  bond,  obligation  or  coupon  is  his  property;  and  thereon  the 
principal  sum  therein  mentioned  is  payable  only  to  such  owner  or 
holder,  or  his  legal  representatives  or  assigns,  unless  such  bond,  obli- 
gation or  coupon  be  transferred  by  indorsement  in  blank,  or  payable  to 
bearer,  or  to  order,  with  the  addition  of  the  assignor's  place  of  resi- 
dence. 

*  This  article  appears  only  in  the  statute  as  enacted  in  New  York 
and  Ohio. 


380  THE    NEGOTIABLE    INSTRUMENTS    LAW.       §§  340,  341. 

ARTICLE  XIX. 
Laws  Repealed;   When   to   Take   Effect. 

Section  340.  Laws  repealed. 

34  L  When  to  take  effect, 

§  340.  Laws  repealed.—  The  laws  or  parts  thereof  specified  in  the 
schedule  hereto  annexed  are  hereby  repealed. 

§  341.  When  to  take  effect.— This  chapter  shall  take  effect  on 
the  first  day  of  October,  eighteen  hundred  and  ninety-seven. 

Schedule  of  Laws  Repealed. 

Revised  Statutes.                          Sections.  Subject-matter. 

R.  S.,  pt,  II.,  ch.  4,  tit.  II. .     All Bills  and  notes. 

Laws  of  Cliap.  Sections.  Subject-matter. 

1835 141 All Notice  of  protest ;  how  given. 

1857 ......     416 All Commercial  paper. 

1865 309 All Protest  of  foreign  bills,  etc. 

1870 438 All Negotiability   of   corporate  bonds; 

how  limited. 

1871  84 All Negotiable  bonds;   how  made  non- 

negotiable. 

1873 595 All Negotiable  bonds;  how  made  ne- 
gotiable. 

1877 65 1,3 Negotiable    instruments   given   for 

patent  rights. 

1887 461 All Effect .  of   holidays   upon   payment 

of  commercial  paper. 

1888 229 All One  hundredth  anniversary  of  the 

inauguration  of  George  Wash- 
ington. 

1891 262 1 Negotiable    instruments    given   for 

a  speculative  consideration, 

1894 607 All Days  of  grace  abolished. 


[381] 


INDEX. 


[References  are  to  paragraphs  marked  §.] 

ABSCONDING.  ^     ^      ^„_ 

of  maker  or  acceptor,  as  excuse  for  nonpresentment,  etc.,  397. 

ABSENCE. 

from  liome  of  maker  or  acceptor,   as  excuse   for   nonpresentment, 

etc.,  393. 
ACCEPTANCE.    See  also  Acceptance  Supba  Protest;  Acceptor;  Ac- 
ceptor Supra  Protest;   Presentment  for  Acceptance. 
meaning  of,  270. 

applies  only  to  bills  of  exchange,  256. 
what  bills  do  and  do  not  require,  257. 
liability  of  drawer  before  and  after,  270,   311,  42_4,  475. 
relation  of  drawee  to  bill  before  and  after,  271,  272. 
effect  of,  272. 

must  be  according  to  tenor  of  bill,  258. 
of  foreign  bills  drawn  in  sets,  GO. 
what  acceptance  admits  — 

signature  of  drawer,  273,  424. 

funds  of  drawer  in  acceptor's  hands,  274. 

capacity  of  drawer,  275. 

capacity  of  payee  to  indorse,  153,   166,  276. 

handwriting  and  authority  of  agent  of  drawer,  277. 
what  acceptance  does  not  admit  — 

signature  of  payee  or  indorser,  278,  425. 

agency  to  indorse,  279. 

genuineness  of  terms  in  body  of  bill,  280. 
who  may  accept  — 

when  drawee  incapacitated,  bill  may  be  treated  as  dishonored, 
281. 

drawee  or  his  authorized  agent  may,  281. 

acceptance  l)y  two  where  bill  drawn  on  one,  281. 

acceptance  by  stranger  to  instrument,  282. 

acceptance  by  agent,  283. 

acceptance  where  drawees  are  joint  parties  or  partners,  284, 
when  acce])tance  may  be  made  — 

may  be  in  blank  before  execution  by  drawer,  285. 

or  after  dishonor.  2S5,  286. 

or  after  death  of  drawer,  286. 

drawee  has  twenty-four  hours  within  which  to  accept  or  refuse, 
287. 

time  of  acceptance,  presumptions  as  to.  288. 

acceptance  dates  from  delivery,  and  until  then  is  revocable,  285. 
express,  forms  of,  298. 
implied,  what  will  amount  to,  299. 
verbal.  300. 

[383] 


[Rfferetices  arc  to 
384:  INDEX.  jmragraiJhs  marked  §.] 

ACCEPTANCE  —  continued. 

statutes  as  to  written,  construction  of,  301. 

may  be  on  separate  paper,  302. 

promises  to  accept,  303-305. 

absolute  and  conditional  acceptances,  306,  307,  310. 

qualified  acceptances,  202,  309. 

bv  what  law  governed,  492. 

for  honor.     8ee  Acceptance  Supra  Protest. 

presentment  for.     See  Presentment  for  Acceptance. 

ACCEPTANCE,    PRESENTMENT    FOR.     /See   Presentment   for    Ac- 
ceptance. 

ACCEPTANCE  SUPRA  PROTEST.     See  also  Acceptance. 
what  is,  289. 

circumstances  under  which  made,  290. 
forms  of.  290. 
method  of,  290. 

acceptor  should  notify  party  for  whose  honor  acceptance  made,  290. 
who  may  accept  for  honor,  291. 
may  be  for  honor  of  one  or  all  pi.rties,  292. 
presumed  to  be  for  honor  of  drawer,  if  party  not  specified,  292. 
several  acceptors  for  honor  of  different  parties,  292. 
rights  and  liabilities  of  acceptor  for  honor,  293,  294. 
admissions  of  acceptor  for  honor,  295. 
holder  not  bound  to  take,  296. 

ACCEPTOR.     See  also  Acceptor  Supra  Protest. 
contract  of,  272,  311. 
is  principal  debtor,  272,  475. 

presentment  for  payment  not  necessary  to  bind,  311,  320. 
not  entitled  to  notice  of  dishonor,  358,  367. 
wliat  acceptor  admits,  273-277,  424. 
what  acceptor  does  not  admit,  278-280,  425. 
rights  of,  as  to  recovery  of  money  paid  on  forged  paper,  2<8,  280, 

^424,  425. 
who  may  accept,  281-284. 
when  drawer  and  indorser  may  sue,  408,  409. 
when  may  sue  drawer,  409. 

death  of,  presentment  for  payment  in  case  of,  318. 
by  what  law  liability  of,  governed,  492. 
acceptor  supra  protest.     See  Acceptor  Supra  Protest. 

ACCEPTOR  SUPRA  PROTEST, 
who  mav  be,  291. 

should  notify  i)arty  for  whoso  honor  acceptance  made,  290. 
several  acceptors  for  honor  of  different  parties,  292. 
rights  and  liabilities  of,  293,  294. 
admissions  of,  295. 
may  sue  drawer  or  indorser  if  compelled  to  pay,  409. 

ACCIDENT. 

as  excuse  for  nonpresentment,  etc.,  385. 

ACCOMMOD.^TION  PAPER. 
definition  of,  93. 

liabilities  and  rights  of  parties  to,  93-96. 
issued  by  one  partner  without  consent  of  all,  138. 


[Rcfvnucfs  are  to  ^^^^,^  3j^5 

parayniplts  marked  §.] 

ACCOMMODATION  PAPER  —  continued. 
issued  by  corporations,  145. 

notiei;  of  acconiiiiodiition  chaiaotcr,  efTect  of,  200,  2^8. 
whether   aecomniodation   character  of   instrument  is   an  equity   at- 

tacliin^'  after  maturity,  205,  242. 
diversion  of  — 

what  amounts  to,  249. 

eflcet  of.  248,  477. 

notice  of,  etFect  of,  248. 
acceptor  or  maker  of.  suit  l)y,  272.  39S,  400._ 
indorser  of,  entitled  to  notice  of  dishonor,  370. 
amount  of  recovery  on,  210,  230. 

ACCORD  AND  SATISFACTION, 
defined.  407. 
efTect  of,  407. 
part  payment,  408. 

ACTIONS.     Sec  also  Defenses, 
who  may  sue,  308-400^ 
who  may  be  sued.   407-409. 
wlien  ri^lit  of  action  accrues,  410-413. 
when  ri<;lit  of  action  exi)ires,  414,  415. 
cause  of  action  indivisible,  401. 
at  common  law  acceptor,  maker,  drawer,  and  indorsers  could  not  be 

sued  in  one  action,  407. 
statutory  changes  of  common-law  rule,  407. 
form  of  "action  governed  by  lex  fori,  484,  496. 

ADDRESS. 

of  check,  30. 

of  party  entitled  to  notice  of  dishonor,  376. 

ADMINISTRATORS.     Bee  Executors  and  Administrators. 

ADMISSIONS. 

by  acceptance,  273-277,  424. 
of  acceptor  for  honor,  295. 

ADOPTION. 

,    of  forged  signature,  efTect  of,  421. 

AFTER  SIGHT. 

meaning  of.  in  bills  and  notes,  327. 

paper  payable  certain  time  after  sight  entitled  to  grace,  327. 

AGENTS.  .     .      , 

depositing   to    his    private   account    funds   of    undisclosed   principal 

may  sue  bank  for  dishonor  of  check,  41. 
as  parties  to  negotiable  instruments,  121-133. 
who  may  act  as,  121. 
authority  of,  how  created,  122,  146. 
authority  "  bv  procuration,"   123. 
implied  authority  of.  124.  125. 
how  agent  should   sign.  120. 
undisclosed  ])rincipal  not  liable.  127. 
when  agent  individually  bound.  128. 
ratification  of  agent's  acts,  129. 
revocation  of  agency,  130. 

25 


QQ.i  [Rcfrrrnccs  arc  to 

^^"  INDEX.  imnujmplis  marked  §.] 

AGENTS  —  confimied. 

banks  as  collecting  agents,  131. 

duty  of  collecting  agent  to  present  for  acceptance  and  payment,  132. 

OANTiership  of  paper  in  hands  of  collecting  agent,  133. 

effect  of  delivery  by,  in  violation  of  instructions.  211. 

notice  to,  255. 

presentment  for  acceptance  to,  of  drawee,  2G0. 

authority  of,  to  draw  admitted  by  acceptance.  277. 

authority  of,  to  indorse  not  admitted  by  acceptance,  279. 

acceptance  by,  283. 

presentment  for  payment  by,  312. 

presentment  for  pajanent  to,  316. 

notice  of  dishonor  by,  365,  366. 

notice  of  dishonor  to,  368,  372. 

when,  may  sue  on  negotiable  instruments,  402. 

can  take  nothing  but  money  in  payment,  457. 

ALIEN  ENEMIES. 

contracts  with,  void,  163. 

as  drawer,  acceptor,  indorser,  etc.,  164. 

ALLONGE,  180. 

ALTERATION. 

what  constitutes  material,  427,  428. 

effect  of,  427,  440-442. 

if  material,  and  fraudulently  made,  is  forgery,  420,  427. 

changing  date,  and  time  of  payment,  429. 

changing  place  of  payment,  430. 

changing  amoimt  of  principal  or  interest,  431. 

changing  medium  of  payment,  432. 

changing  personality,  number,  or  relations  of  the  parties,  433. 

adding  or  detaching  seal,  434. 

changing  joint  into  Joint  and  several  note,  etc.,  434. 

adding  name  of  witness,  434. 

change  in  consideration,  435. 

addition  of,  or  change  in,  words  of  negotiability,  436. 

immaterial  alterations,  illustrations  of,  437. 

alterations  by  agreement  of  parties,  438. 

rights  of  bona  fide  holder  of  altered  instrument,  222,  439. 

when  material  and   fraudulently   made,   effect  of,   440. 

when  material,  but  innocently  made,  effect   of,   441. 

immaterial  alteration  with  fraudulent  intent,  effect  of,  442. 

burden  of  proof  of,  443. 

ALTERNATIVE, 
drawees,  284. 

AMOUNT. 

to  be  paid  must  be  certain,  82-85. 

A]VIOUNT  OF  RECOVERY. 

when  less  than  full  value  paid,  216,  217. 

ANTECEDENT  DEBT. 

as  a  consideration,   100. 

APPLICATION  OF  PAYMENTS. 

rights  of  parties  as  to,  459,  460. 


[Refrnnces  arc  lo  indkx.  367 

puruyniphs  marked  §.] 

APPROPRIATION  OF  PAYMENTS, 
rights  of  parties  as  to,  459,  460. 

ASSIGNEE. 

takes  subject  to  all  equities,  1G8. 

of  bankrupt,  notice  of  dishonor  to,  371. 

ASSIGNMENT. 

ellect  of  bills  and  nonnegotiable  orders  as,  10-14. 
assignee  takes  subject  to  all  equities,  1C8. 

AT  SIGHT.     Sec  Sight. 

ATTORNEY'S  FEES. 

effect  on  negotiability,  of  stipulation  to  pay,  84,  85. 

AUTHORITY. 

of  one  partner  to  bind  tirni,   134-137. 
of  agents,  122-125,   14(3. 

BANK  BILLS  OR  NOTES. 

description  and  characteristics  of,  24,  25. 

BANK  CHECKS.     See  Checks. 

BANKRUPTCY. 

dissolves  partnership,   140.  ,        _.         u- 

presentment   for   acceptance   in   case   of   dissolution   of   partnership 

by,  259. 
presentment  for  payment  in  case  of,   315. 
notice  of  dishonor  in  case  of,  371. 

BANKRUPTCY  AND  INSOLVENCY  LAWS. 

power  of  Congress  and  of  States  to  enact,  465. 
discharge  of  debtor  under,  466. 

BANKS. 

receiving  bills  and  notes  for  collection  are  holders  for  value,  98. 
as  collecting  agents,  131. 

duty  of,  to  present  for  acceptance  and  payment,  132. 
ownership  of  paper  in  hands  of  collecting  banks,  133. 
presentment  for  payment  when  instrument  payable  at,  322,  342. 
usage  of.  may  alter'  law  merchant  as  to  days  of  grace,  328. 
demand  by.  by  notice  through  mails,  343,  344. 
notice  of  dishonor  by,   306. 

BEARER. 

instrument  payable  to,  transferable  by  delivery,  168. 
indorsement  iii  blank  makes  instrument  payable  to,   183. 
who  may  sue  on  instrument  payable  to,  398,  403,  404. 

BILLS  OF  CREDIT. 

definition  and  nature  of,  43. 

States  prohibited  from  emitting,  42. 
BILLS  OF  EXCHANGE.     See  also  Negotiable  Lnstrumexts. 

definition  of,  15. 

origin  and  history  of,  2,  3. 


388  I^-DEX. 


IRcfcrniccs  are  to 
para'jrinihs  marked  §.] 


BILLS  OF  EXCHANGE  —  continued. 
forei<in  and  inland,  ^vhat  are,  5,  7. 

difference  between^  6. 

when  character  of,  as  foreign  or  inland,  not  disclosed  on  face,  9. 

sets  in  foreign,  64-66. 
parties  to,  15,  56. 

difference  between,  and  promissory  notes,   17. 
difference  between,  and  checks,  28. 

effect  of.  as  assignment  of  fund  in  drawee's  hands,  10-14. 
must  contain  direction  to  pay,  75. 

BILLS  OF  LADING. 

definition  and  nature  of,  50. 
how  far  negotiable,  51. 

transfer  of,  operates  as  constructive  delivery  of  goods,  51,  52. 
vendor's  right  of  stoppage  in  transitu  defeated  by  hona  fide  transfer 
of,  51. 

BLANK. 

indorsement  in,  183. 

who  may  sue  on  instrument  indorsed  in,  398,  403. 

rights   of   holder   under   blank   indorsement,   404. 

indorsement  in,  by  payee  does  not  affect  his  right  to  sue,  403. 

filling  up  blank  indorsement,  404. 

blank  acceptances,   285. 

instruments  intrusted  to  another  and  wrongfully  filled  up,  209. 

BONA  FIDE  HOLDER. 

what  constitutes  a^  199,  220. 

general  statement  as  to  rights  of,  197,  198. 

hona  fides  essential,  227. 

effect  of  negligence  on  hona  fides,  228,  229. 

must  acquire  instrument  for  valuable  consideration,  230. 

when  price  paid  by,  conveys  notice  of  fraud,  231,  232. 

purchase    must    be    purchase    in    fact,    and   not    mere    bookkeeping 
entrj',  233. 

instruments  taken  as  collateral  security  for  contemporaneous  and 
pre-existing  debts,  234,  235. 

amount  of  recovery  when  instrument  held  as  collateral  security,  236, 

must  acquire  instrument  in  usual  course  of  business,  237. 
^transfers  not  in  usual  course  of  business,  examples  of,  238. 
^  must  acquire  instrument  before  maturity,  239. 

but  transferee  after  maturity  acquires  all  his  transferrer's  title,  201, 
239. 

when    instruments    payable   at   sight   or   on    demand    deemed   over- 
due, 240. 

presumption  that  instrument  is  acquired  before  maturity,  241. 

rule  as  to  accommodation  paper  acquire  I  overdue,  242. 

rule  when  instalment  of  principal  or  interest  is  overdue,  243. 

transfers  on  last  day  of  grace,  244. 

must  acquire  instrument  without  notice  of  equities,  245. 

notice  of  dishonor    by    nonacceptanco    or    nonpayment,    245. 

notice  of  fraud,  defect  of  title,  illegality  of  consideration,  etc.,  246, 

time  when  notice  must  exist,  247. 

notice  of  accommodation  character  of  instrument,  200,  248. 

notice  of  diversion  of  accommodation  paper,  248. 

what  amounts  to  diversionj  249. 

express  notice,   250. 


[References  arc  to  index  38'J 

paraoraph/i  marked  §.] 

IJONA   FIDK   WOlAWAl  — continued. 
implied  notice.  251,  252,  254. 

notice  of  particular  fraud,  illegality,  etc.,  not  necessary,  253. 
notice  to  a^ent,   255. 

one  in  jjosscssion  and  produoinp  instrument  presumed  to  be  a,  199. 
what  rehuts  tiie  prosuniption.  200. 
one  tlionj,di  not  iiiinsi-lf  a  bona  jkle  holder  acquires  title  of  his  trans- 

ferrer.'^201,  203. 
rights  of  indorsee  after  maturity,  201-205. 
rights  of  — 

where  instrument  originated  in  fraud  or  mistake,  206,  210,  220. 

where  undelivered   instruments  .stolen  and   put   in   circulation, 
207,  208,  223. 

where  instnunent  delivered  with  blanks,  whicli  arc  fraudulently 
filled,  2()!t. 

where  instrument  delivered   in   escrow,   and   \)\it  in   circulation 
in  violation  of  instructions,  211-213. 

where  instrument  executed   by   infant,   insane  person,   married 
woman,  etc.,  219. 

where  instrument  declared  void  by  law,  221. 

where  instrument  forged   or   materially  altered,   222. 

where  instrument  executed  under  duress.  224. 

where  there  is  want  or  failure  of  consideration,  248,  446. 
defenses  against,  excluded  by  est()p])el.  214,  215. 
defenses  available  against,  218-224. 

infancy,  coverture,  insanity,  etc.,  of  maker,  219,  444. 

fraud,  when,  220,  44(5. 

instrument  declared  void  by  law,  221,  446. 

want  of  consent  of  maker  —  forgery,  alteration,  etc..  222.  4.39. 

instrument  stolen  while  incomplete  and  undelivered,  208,  223. 

duress,   224,   447. 

real  defenses  admissible  against.  225. 
amount  of  recovery  by,  216,  217.  236. 
set-off  cannot  be  pleaded  against,  473. 
whether  one  is,  determined  by  lex  loci  contractus,  497. 

BONDS.    -See  Courox  Bonds  ;  :Municipal  Bonds. 

BURDEN  OF  PROOF. 

as  to  bo7ia  fide  ownership,  199,  200. 

of  diligence,  as  excuse  for  nonpresentment.  etc.,  392. 

as  to  promptness  in  presentment  for  payment  or  excuse  for  delay, 

320. 
as  to  alteration,  443. 
as  to  consideration.  445. 
as  to  payment,  453. 

BUSINESS. 

bona  fide  holder  must  acquire  paper  in  usual  cour.se  of,  237. 
transfers  not  in  usual  course  of,  examples,  238. 

BUSINESS  HOURS. 

what  are,  is   question   for   jury,    322. 

what  are,  322,  .323. 

presentment  for  payment  must  be  made  during,  322,  323. 

BUSINESS,  PL.^CE  OF. 

presentment  for  acceptance  at.  264. 
presentment  for  payment  at.  316,  334,  335. 


^„  „  ,  [RcfcroiCfs  (ire  to 

'^'^^  INDEX.  paragraphs  marked  §.] 

BUSINESS,  PL.\CE  OF  —  cojriimud. 

presentment  may  be  made  to  person  found  at,  317. 
presentment  at,  should  be  diirinf;  business  hours,  323. 
notice  of  dishonor  to,  372,  37G,  378. 

CALAMITY. 

as  excuse  for  nonpresentment,  etc.,  385. 

CALENDAR  MONTH.    See  Month. 

CAPACITY. 

of  payee  to  indorse  warranted  by  drawer,  acceptor,  and  maker,  153, 

166,  276. 
of  drawer  to  draw  warranted  by  acceptor,  275. 
warranty  of,  by  indorser,  177. 

CASHIER. 

of  bank,  authority  of,  to  certify  checks,  38. 

CAUSE  OF  ACTION. 

cannot  be  split  up,  401. 

recovery  for  part  bars  action  for  remainder,  401. 

interest  may  be  recovered  without  barring  action  for  principal,  401. 

CERTAINTY. 

as  to  engagement  to  pay,  75,  76. 
as  to  fact  of  payment,  77-81. 
as  to  amount  to  be  paid,  82-85. 
as  to  medium  of  payment,  86-89. 

CERTIFICATE  OF  PROTEST.    See  Protest. 

CERTIFICATES  OF  DEPOSIT, 
definition  of,  26. 
origin  and  nature  of,  26. 
negotiability  of,  27. 

CERTIFICATES  OF  STOCK. 

description  and  nature  of,  45. 
transfer  of  — 

as  between  transferrer  and  transferee,  46. 

as  between  transferee  and  creditor  of  transferrer,  47. 

AS  between  transferee  and  third  party  who  has  purchased  the 

shares,  48. 
usual  methods  of  transfer,  49. 

CERTIFICATION  OF  CHECKS.     See  Checks. 

CHECKS. 

definition  of,  28. 

differences  between  hills  of  exchange  and,  28. 

is  a  draft  or  order,  29. 

must  be  dra\vn  on  a  bank  or  banker,  30. 

purports  to  be  drawn  on  a  deposit  of  funds,  31. 

must  be  for  payment  at  all  events  of  a  certain  sum  of  money,  32. 

payable  to  a  certain  person  therein  named,  or  to  him  or  his  order, 

or  to  bearer,  33. 
is  payable  instantly  on  demand,  28,  34. 
when  should  be  presented  for  payment,  30. 
laches  in  presenting  for  payment,  effect  of,  28,  39. 


[Rfferrnccs  are  to  oqi 

paragraphs  marked  §.]  i.mj^a.  ^yi 

CHECKS  —  continued. 

when  slatuto  of  limitations  begins  to  run  on,  28. 

not  entitli'd  to  j,miicc^  34. 

stale,  status  of,  39. 

whether  holder  of  uncertified  check  may  sue  bank,  40. 

damages  for  improper  dishonor   of,  41. 

eflFect  of,  as  assignment  of  fund,  10-14. 

payment  by,  4'u . 

certification  of  — 

bank  under  no  obligation  to  certify,  35. 

similar  to  acceptance  of  bill,  35. 

effect  of,  3G,  37. 

bank  becomes  solely  liable,  3G. 

drawer  and  indorsers  discharged,  30,  37. 

form  of,  38. 

by  whom  made,  38. 

CHOSE  IN  ACTION. 

not  assignable  at  common  law,  1. 
relaxation  of  common-law  rule,  1. 

CIRCUMSTANCES. 

may  amount  to  notice,  251,  252,  254. 

excusing  nonpresontment,  etc.     Hee  Excuses  for  Nonpbesentment, 
Protest,  and  Notice. 

CIVIL  WAR.     See  War  between  the  States. 

CLERK. 

presentment  to,  316. 
notice  of  dishonor  to,  372. 

COLLATERAL  SECURITY. 

instruments  taken  as,  for  contemporaneous  and  pre-existing  debts, 

234,  235. 
amount  of  recovery  on  instruments  taken  as,  236. 
parting  with,  effect  of,  on  surety's  liability,  478. 
receipt  of,  by  maker  or  acceptor  as  excuse  for  nonpresentment,  etc., 

396. 

COLLECTION  AGENTS, 
banks  as,  131. 

duty  of,  to  present  for  acceptance  and  payment,  132. 
ownership  of  paper  in  hands  of,  133. 

COMITY  OF  NATIONS,  485. 

COMMERCE. 

interdiction  of,  as  excuse  for  nonpresentment,  etc.,  384. 

CO]VBIERCIAL  PAPER.    Sec  Negotiable  Instruments. 

COMMON  LAW. 

choses  in  action  not  assignable  at,  1. 
whether  promissorj-  notes  negotiable  at,  4. 

COMPOUNDINO  OF  CRIMES, 
as  a  consideration,  103. 


390  Txm^x  [/?e/erc»ccs  are  to 

paragraphs  marked  §.I 

COMrROMISE. 

as  a  consideration,  97. 
by  part  payment,  468. 

co:mfutation. 

of  time,  329-331. 

CONDITION. 

instrument  payable  on,  not  negotiable,  77. 
delivery  on,  71,  211-213. 

CONDITIONAL  ACCEPTANCES,  300-309. 

CONDITIONAL  INDORSEMENT, 
defined,  184. 
examples  of,   184. 
condition  in,  does  not  aflfect  negotiability,  184. 

CONDITIONAL  PAYMENT,  457. 

CONFEDERATE  WAR.     See  War  between  the  States. 

CONFLICT  OF  LAWS. 

importance  of  subject,  483. 

general  principles,  484. 

comity  of  nations,  485. 

lex  loci  contractus  governs   as   to  validity,   interpretation,  nature, 

obligation,  etc.,   105,   100,  480. 
interpretation,   meaning  of,   480. 
nature  and  obligation,  meaning  of,  487. 
what  constitutes  place  of  execution,  488. 

domicile  of  maker  or  acceptor  presumed  to  be  place  of  execution,  489. 
what  is  loci  co))tractiif>  of  maker,  acceptor,  drawer,  and  indorser,  492. 
when  lex  loci  solutionis  governs,  490. 
Avhen  lex  loci  rci  sitae  governs,  491. 
lex  fori  governs  as  to  remedy,  including  parties  plaintiff,  statute  of 

limitations,  form  of  action,  evidence,  set-off,  exemptions,  etc.,  493- 

490,  498. 
lex  loci  contractus  determines  whether  one  is  a  hona  fide  holder,  497. 
bv  what  law  presentment,  protest,  and  notice  of  dishonor  governed, 
^500. 

CONGRESS. 

power  of,  to  enact  bankruptcy  laws,  405. 

CONSENT. 

want  of,  as  defense  against  toyia  fide  holder,  222. 

CONSIDERATION, 
defined,  90. 

must  be  proved  in  nonnegotiable  contracts,  90,  91. 
seal  imports  a,  1,  90. 

presumed  in  negotiable  instruments,  1,  90,  91,  445. 
between  what  parties  consideration  open  to  inquiry,  1,  93,  110-113, 

445. 
accommodation  paper,  93-96. 
valuable,  examples  of,  97-100,  118. 
pre-existing   debts   as   a,   100. 
instruments  taken  as  collateral  security   for  contemporaneous  and 

pre-existing  debts,  234,  235. 


[Reffirticrs  arc  to  .vniY  'V\'\ 

paragraphs  marked  8.] 

CONSIDERATION  —  continued. 
illegal,   exaiii])k's   of,    101-104. 
legality  of,   piesiiiiied,  445. 
by  wiiat  law  legality  of,  determined,  105,  100. 
failure  of,   KIS,   445^ 

partial  want,  failure,  or  illegality  of,  107-100,  445. 
of  renewal  notes,  114,  115. 
burden  of  proof  as  to,  445. 
change  in,  constitutes  material  alteration,  435. 

CONSTITUTION  OF  UNITED  STATES. 

States  prohibited  by,  from  emitting  bills  of  credit.  42. 
provision  in,  empowering  Congress  to  pass  bankrupt  laws,  4G5. 

CONSTRUCTIVE  NOTICE.     Sec  Notice. 

CONTAGIOUS  DISEASE. 

existence  of,  as  excuse  for  nonpresentment,  etc.,  385. 

CONTEMPORANEOUS  DEBT. 

collateral  security  taken  for,  234. 

CONTRIBUTION. 

none  between  successive  indorsers,  188^  475. 
equal  indorsers  entitled  to,   188. 
when  right  of  action  for,  accrues,  481. 

COPARTNERSHIP.     See  Partneks, 

COPROMISORS. 

presentment  for  payment  to,  319. 

CORPORATIONS.    See  also  Municipal  Corporations. 

public  and  private,  definitions  and  examples  of,  142. 

power  of.  to  execute  negotiable  instruments,  143.  144. 

negotiable  instruments  of,  presumed  to  be  issued  in  course  of  its 
business,   145. 

accommodation  paper  issued  by.  145. 

agents  of,  appointment  and  authority  of.   146. 

doctrine  that,  can  only  bind  themselves  by  contract  under  seal,  ob- 
solete. 21. 

whether  instrument  of,  under  seal  negotiable,  73. 

COSTS. 

of  collection,  stipulations  as  to,  84,  85. 

COUPON  BONDS. 

by  whom  issued,  18. 

description  of..  19. 

meaning  of  term  "  coupon,"  20. 

closely  assimilated  to  promissory  notes,  20. 

negotiability  ofj  21. 

COURSE  OF  BUSINESS.  . 

hona  fide  holder  must  acquire  instrument  in  usual  course  of  busi- 
ness, 237. 
transfers  not  in  usual  course  of  business,  238. 

COVENANT  NOT  TO  SUE. 
effect  of.  470. 


qQ4.  Ti\rr»wv  [References  are  to 

*  ir^DJLA.  paragraphs  marked  §.] 

COVERTUEE.     See  Married  Women. 
CREDIT,  BILLS  OF.     See  Bills  of  Credit. 

CURRENCY. 

instrument  payable  in,  not  negotiable,  27,  87. 

CUSTOM. 

authority  implied  from,  125. 

DATE. 

of  negotiable  instruments,  62,  70. 

change  in,  constitutes  material  alteration,  429. 

DAYS. 

computation  of,  330. 

DAYS  OF  GRACE.     See  Grace,  Days  of. 

DEATH. 

revokes  agency,  130. 
dissolves  partnership,  140. 
of  holder  — 

as  excuse  for  nonpresentment,  etc.,  395. 

presentment  for  payment  in  case  of,  315. 

notice  of  dishonor  in  case  of,  366. 
of  maker  or  acceptor,  presentment  for  payment  in  case  of,  318. 
of  drawee,  presentment  for  acceptance  in  case  of,  261. 
of  drawer,  bill  may  be  accepted  after,  280. 
of  drawer  or  indorser,  notice  of  dishonor  in  case  of,  371. 
of  partner,  presentment  for  payment  in  case  of,  315,  319. 

DEBTS. 

pre-existing,  as  a  consideration,  100. 

instruments  taken  as  collateral  security  for  contemporaneous  and 
pre-existing,  234,  235. 

DEFAULT. 

in  presentment,  etc.    See  Excuses  for  Nonpresentment,  Protest, 
AND  Notice. 

DEFENDANTS. 

to  actions  on  negotiable  instruments,  407-409. 

DEFENSES. 

real  and  personal,  defined,  225. 

between  immediate  parties,  113. 

against  indorsee  of  overdue  paper,  204. 

against  bona  fide  holder  for  value,  218-224. 

excluded  by  estoppel,  214. 

cla.ssification  of,  416,  417. 

defendant  did  not  make  the  instrument  — 

forgery,  418-42(i.     See  Forgery. 

material  alteration,  427-443.     See  Alteration. 
the  contract  sued  upon  is  in  law  nonenforceable  — 

incapacity  of  party,  444.     See  Parties  to  Negotiable  Instru- 
ments. 

want,  failure,  or  illegality  of  consideration,  445.     See  Consid- 
eration. 

fraud,  440.     See  Fraud. 

duress,  447.     See  Duress. 


[References  are  to  tvtiity  qo- 

paragraphs  marked  §.]  usut^x.  ^yy 

DEFENSES  —  continued. 

plaintitr  not  entitled  to  sue  — 

lejjiil  title  to  instrument  not  vested  in  plaintifT,  448. 
the  obli^'ation  created  lias  been  discharged  — 
by  payment.  449-4U;i.     /S'ce   Tayment. 
by  tender,  4(i4.     .See  Tender. 
by  bankruptcy  or  insolvency,  4G5,  406.     .S'ce  Bankeuptct  and 

Insolvency  Laws. 
by  accord  and  satisfaction,  4G7,  408.     »S'ee  Accord  and  Satis- 
faction. 
by  release.  400.     /?ee  RELEASE. 

by  covenant  not  to  sue,  470.    Hce  Covenant  not  to  Sue. 
by  novation,  471.     Hec  Novation. 
by  set-off,  472-474.     .SVr  Set-off. 

defendant  is  a  surety,  and  is  discharged,  475-480.      .SVp  Sitiety. 
action  barred  by  statute  "of  limitations,  414,  415,  481,  482.    See  Stat- 
ute of  Limitations. 

DELAY. 

in  presentment,  etc.     Hee  Exci  ses  for  Nonpbesentment,  Protest, 
AND  Notice. 

DELIVERY. 

necessity  of,  09,  71,  109. 

constructive,  69. 

instrument  takes  effect  on,  70. 

presinnptions  as  to,  70. 

in  escrow,  71,  212. 

in  violation  of  instructions,  211. 

transfer  by,  without  indorsement.  168. 

transferrer  by,   warranties  of,   424. 

law  of  place  of,  governs,  488. 

place  of  execution  is  where  delivery  made,  488. 

presumption  as  to  place  of,  488. 

DEMAND. 

checks  always  payable  on,  28,  34. 
when  instruments  payable  on,  deemed  overdue,  240. 
bills  payable  on.  do  not  require  presentment  for  acceptance,  257. 
instrument  payable  on,  where  no  time  specified,  321. 
presentment  for  payment  when  instrument  payable  on,  321,  324,  325. 
instrument  payable  on.  not  entitled  to  grace,  324. 
when  stsitute  of  limitations  begins  to  run  on   instrument   payable 
on,  415. 

DEMAND  OF  PAYMENT.     See  Presentment  for  Payment. 

DEPOSIT. 

check  purports  to  be  d^a^vIl  on,  31. 

DEPOSIT.  CERTIFICATES  OF.    See  Certificates  of  Deposit. 

DEPOSITARY. 

of  negotiable  instrument  cannot  sue,  398. 

DEPRECIATED  CURRENCY. 

acceptance  of,  by  creditor,  absolute,  458. 

DESTRICTION.  4 

of  bill,  whether  amounts  to  implied  acceptance.  299. 


396  INDEX. 


[Refefences  ore  to 
paragraphs  marked  §.I 


DETEXTIOX. 

of  bill,  whether  amounts  to  implied  acceptance,  299. 

DILIGENCE. 

in  presentment  for  acceptance.  209. 
in  presentment  for  payment,   337,  392. 

DISABILITY.     See  Incapacity. 

DISCHARGE. 

of  drawer  and  indorsers  by  certification  of  check,  37. 
of  surety,  475-480. 

by  payment,  449-4G3.    See  Payment. 
by  tender,  464.     Sec  Tkndek. 

by  bankruptcy  or  insohency,  4G5,  4G6.     See  Bankruptcy  and  In- 
solvency Laws. 
by  accord  and  satisfaction,  467,  468.    See  Accord  and  Satisfaction. 
by  release,  469.     See  Release. 

by  covenant  not  to  .sue,  470.     See  Co\^nant  not  to  Sue. 
by  novation,  471.     See  Novation. 
by  set-off,  472-474.     See  Set-Off. 

DISEASE. 

existence  of,  as  excuse  for  nonpresentment,  etc.,  385. 

DISHONOR,  NOTICE  OF.    See  Notice  of  Dishonor. 

DISSOLUTION  OF  PARTNERSHIP, 
how  caused,  140. 
when  notice  of,  necessarj',  140. 
effect  of,  140,  141. 

DISTURBANCES. 

military  and  political,  as  excuse  for  nonpresentment,  etc.,  384,  385^ 

DIVERSION. 

of  accommodation  paper  — 
what  amounts  to,  249. 
effect  of,  248,  477. 

DOCK  RECEIPTS.    See  Warehouse  Receipts. 

DOMICILE. 

of  maker  or  acceptor  — 

change  of,  as  excuse  for  nonpresentment,  etc.,  397. 
when  presumed  to  be  place  of  execution,  489. 

DONATIO  CAUSA  MORTIS. 

of  negotiable  instrument,  suit  by  donee,  398. 

DORMANT  PARTNER. 

notice  of  retirement  of,  not  necessary,  140. 

DRAWEE. 

relation  of,  to  bill  before  and  after  acceptance,  271,  272. 

where  incapable  of  contracting,  holder  may  treat  bill  as  dishonored, 

281. 
joint  drawees,  acceptance  in  case  of,  284. 
alternative  drawees,  284. 
has  twenty-four  hours  within  which  to  accept  or  refuse,  287. 


[Refn-encrs  are  to  ony 

pa  ray  ruphs  marked  i.]  i^ui^\.  OJ  i 

dra\m<:r. 

liability  of,  before  and  after  acceptance,  270,  311,  424,  475. 

when  bound  w  itiioiit  [)rosentni('nt  for  acceptance,  258. 

sifrnature  and  cajnuity  of,  admitted  by  accejitance,  273,  275. 

bill  may  be  aocei)ted  after  death  of,  28(5. 

discliarired  unli-ss  bill  jiresented  at  maturity  and  notice  of  dishonor 

given,  311,  320.  358,  350,  307. 
action  aj^ainst,  for  nonacceptance,  413. 
when  can  sue  acceptor.  408,  400. 
when  acceptor  and  indor.ser  can  sue,  408,  409. 
when  estopped  to  dcnv  genuineness  of  indorsement  or  acceptance, 

424. 
by  what  law  liability  of,  governed,  492. 

DRUNKEN  PERSONS, 
contracts  of,  101. 

degree  of  drunkenness  sufficient  to  constitute  valid  defense,  IGl. 
ratification  of  contracts  made  while  drunk.  162. 

DUE  BILL. 

whether  a  promissory  note,  70. 

M'hen  suit  may  be  commenced  on,  411. 

DURESS. 

defined,  447. 

defense  of,  224,  447. 

to  principal,  etlect  of,  on  surety's  liability,  477. 

ENTIRE  DEMAND. 

what  constitutes,  401. 

cannot  be  .split  up.  401. 

recovery  for  part  bars  action  for  remainder,  401. 

interest  may  be  recovered  without  barring  action  for  principal,  401. 

EPIDEMICS. 

existence  of,  as  excuse  for  nonpresentment,  etc.,  385. 

EQUITABLE  ASSIGN:\IENT. 

effect  of  bills  and  nonnegotiable  orders  as,  10-14. 

EQUITIES. 

bona  fide  holder  takes  discharged  of,  1,  197,  198. 
assignee  takes  subject  to.  168. 

indorsee  of  overdue  paper  takes  subject  to  what  equities,  202,  204. 
whether  accommodation  character  of  instrument  is  an  equity  attach- 
ing after  maturity,  205,  242. 

ESCROW. 

delivery  in.  71,  212. 

difference  between  specialties  and  negotiable  instruments  delivered 

in.  213. 
delivery  bj'  custodian  in  violation  of  instructions,  211-213. 

ESSENTIAL  REQUISITES  OF  NEGOTIABLE  INSTRUMENTS, 
must  be  open  —  i.  c,  unsealed.  73,  74. 
engagement  to  i)ay  must  be  certain.  75,  76. 
fact  of  payment  must  be  certain,  77-81. 
amount  to  be  paid  must  be  certain.  82-85. 
medium  of  payment  must  be  money.  86-89. 


oQQ  ■    w  [Rcfernwes  are  to 

•^■^^  12\DEX.  iKiruyraphs  marked  §.] 

ESTOPPEL. 

defenses  excluded  by,  214. 

good  faith  essential  to,  215. 

by  adoption  of  forged  signature  as  genuine,  422. 

to    deny   genuineness    of    signature,    position    of    drawer,    indorser, 

drawee,  acceptor,  and  transferrer,  273,  423,  424. 
by  acceptance,  273-277. 

EVIDi:XCE.  Sec  also  Parol  Evidence. 

statute  of  limitations  cannot  be  given  in,  under  general  issue,  414. 
place  of  date  prima  facie  evidence  of  maker's  residence  and  place  of 

business.  337. 
protest  exclusive  evidence  of  dishonor  of  foreign  bill,  347. 
certificate  of  protest  as,  35.5-357. 
possession  prima  facie  evidence  of  ownership,  406. 
questions  of,  governed  by  lex  fori,  496. 

EXCHANGE. 

instrument  payable  with,  negotiable,  83. 

EXCHANGE,  BILLS  OF.    See  Bills  of  Exchange. 

EXCUSES  FOR  NONPRESENTMENT,  PROTEST,  AND  NOTICE, 

war,  384. 

interdiction  of  commerce,  384. 

military  disturbances,  384. 

political  disturbances,  385. 

epidemics,  385. 

overwhelming  calamities^  385. 

when  drawer  has  no  right  to  require,  387. 

when  presentment,  protest,  and  notice  have  been  waived,  388.  389. 

when  no  one  in  existence  upon  whom  to  make  demand,  390. 

when  bill  or  note  is  void,  and  drawer  or  indorser  knows  it  to  be  so,. 
391. 

•when  party  cannot  be  found  after  due  diligence,  392. 

when  place  of  business  or  payment  closed,  393. 

when  party  traveling,  absent  from  home,  etc.,  393. 

when  instrument  acquired  too  late  to  make  demand  or  give  notice, 
394. 

sudden  illness  or  death  of  holder,  395. 

when  drawer  or  indorser  has  received  funds  to  pay  instrument,  or 
has  received  security  or  indemnity,  396. 

when  maker  or  acceptor  has  absconded  or  removed  his  domicile,  397. 

when  impediment  ceases,  duty  to  make  demand  or  give  notice  re- 
vives, 383. 

inability  to  find  maker  or  acceptor  does  not  excuse  want  of  notice 
to  drawer  or  indorser,  but  inability  to  find  latter  does,  393. 

EXECUTION. 

formalities  of,  governed  by  lea:  loci  contractus,  486. 

place  of,  what  constitutes,  488. 

place  of,  when  domicile  of  maker  or  acceptor  presumed  to  be,  489. 

exemptions  from,  governed  by  lex  fori,  498. 

EXECUTORS  AND  ADMINISTRATORS. 

cannot  bind  estate  by  negotiable  instrument,  117. 

are  individually  bound,  117,  118. 

how  individual  liability  excluded,  118. 

may  transfer  instrument  payable  to  order  of  deceased,  119. 

one  of  several,  may  transfer  V)y  indorsement,  119. 


[  Kffrrrn  res  a  re  to  ,  v ,,  ,•■  y  *  <l  Q  c* 

parayruphs  marked  §.]  i.m»i-\.  oy\f 

EXECUTORS  AND  ADMINISTRATORS  — con <i;i«e(/. 
presentment  for  accejitanee  to,  261, 
presentment  for  j)aynient  by,  1^15. 
presentment  for  payment  to,  318, 
notice  of  (li-;lionor  by,  .'{(id. 
notice  of  didlionor  to,  371. 

EXEMPTIONS. 

from  execution,  jroverned  by  lex  fori,  498, 

EXPRKSS  ACCEPTANCE.    See  Acceptance. 

EXPRESS  NOTICE.    See  Notice. 


FALSE  REPRESENTATIONS,     See  Fraud. 

FEDERAL  COl'RTS. 

rules  of  decision  of.  in  respect  to  negotiable  in.struments,  8. 
sometimes  disregard  State  statutes  in  applyinf,'  law  merchant,  250. 
have  jurisdiction  of  suits  between  citizens  of  different  States,  483. 

FEES,  ATTORNEY'S. 

effect  on  negotiability,  of  stipulation  to  pay,  84,  85. 

FELONIES. 

compounding,  illegal.  103, 

FEME  COVERT,    See  Married  Women. 

FEME  SOLE. 

presentment  for  payment  in  case  of  marriage  of,  315. 

FICTITIOUS  NAME, 

signing  of.  with  intent  to  defraud,  is  forgery,  419. 

FIDUCIARIES  AS  PARTIES.     See  Executors  and  Administrators; 
Guardians  ;  Trustees. 

FORBEARANCE, 

to  sue,  as  a  consideration,  97. 

FOREIGN  BILLS  OF  EXCHANGE.    Sec  Biixs  or  Exchange. 

FOREIGN  LAWS, 

courts  will  not  take  judicial  notice  of,  499. 

FORGERY. 

definition  ofj  418, 

illustrations  of,  418,  419. 

alteration  is,  wiien,  420,  427.     See  ALTERATION. 

making  must  be  counterfeit  and  false  in  order  to  amount  to,  420. 

if  real,  though  fraudulently  procured,  does  not  amount  to,  420. 

intent  to  defraud,  and  uttering,  essential,  421, 

adoption  of  forged  signature.  422. 

estoppel   to  deny  genuineness  of  signature.    poNition   of  drawer,   in- 

dor.ser,  drawee,  acce]itor,  and  transferrer.  423,  425. 
acceptance  no  admission  of  indorser's  signature.  425. 
recovery  of  money  paid  on   forged  instrument,  278.  280.  424-420. 
good  defense  against  ho)ni  fide  holder,  222. 


400  i:nDex. 


[References  are  fo 
paragraphs  marked  §.] 


FORMAL  REQUISITES  OF  NEGOTIABLE  INSTRUMENTS. 
no  particular  form  required,  57. 
signature.  58. 

material  on  which  written,  58. 
whole  instrument  must  be  in  writing,  59. 
date.  ()2. 

words  of  negotiability,  63. 
stamps,  67,  68. 
delivery,  69-71. 

FRAtD. 

defined,  446. 

efl'ect  of,  446. 

defense  of,  generally  available  only  between  immediate  parties,  206, 
210,  446. 

when  a  good  defense  against  a  bona  fide  holder,  220,  446. 

Avlicn  price  ])aid  by  purchaser  conveys  notice  of,  231,  232.  • 

material  alteration  fraudulently  made,  effect  of,  440. 

immaterial  alteration  fraudiilently  made,  effect  of,  442. 

fraudulently  procuring  signature  is  not  forgery,  420. 

amount  of  recovery  by  ho7ia  fide  holder  when  instrument  has  incep- 
tion in,  217. 

effect  of,  on  surety's  liability,  477. 

FUNDS. 

absence  of.  in  drawee's  hands  as  excuse  for  nonpresentment,  etc.,  387. 
withdrawal  of,  by  drawer,  as  excuse  for  nonpresentment,  etc.,  387. 
receipt  of,  by  maker  or  indorser,  as  excuse  for  nonpresentment,  etc., 

390. 
check  purports  to  be  drawn  on  deposit  of,  31. 

FUTURES,  102. 

GENERAL  ISSUE. 

statute  of  limitations  cannot  be  given  in  evidence  under,  414. 

GENUINENESS. 

warranty  of,  by  indorsement,  175. 

acceptance  no  admission  of  genuineness  of  terms  in  body  of  bill,  280. 

GIVING  TIME. 

efl'ect  of,  on  surety's  liability,  479,  480. 

GRACE,  DAYS  OF. 

origin  and  nature  of,  .320. 

what  instruments  entitled  to,  34,  327. 

number  of  days  allowed.  328. 

presentment  for  payment  when  last  day  of  grace  falls  on  Sunday  or 

holiday.  330. 
how  dispensed  with,  332. 
whether  paper  deemed  overdue  when  transferred  on  last  day  of  grace, 

244. 
whether  action  can  be  instituted  on  last  day  of  grace,  410. 
by  what  law  governed,  500. 

GREGORIAN  CALENDAR,  331. 

GROSS  NEGLIGENCE.     See  Negligcncl. 


[Rrfrrrnces  are  to  TvnFY  4-01 

parayraphs  marked  §.]  lyui^x.  tvx. 

GUARANTOR. 

contract  of,  196. 

difrerence  between  liability  of,  and  of  indorser  and  surety,  l'J5,  196. 

GUARANTY. 

ditference  between,  and  suretj'ship,  1!)5. 
difference  between,  and  indorsement,  19(i. 

GUARDIANS. 

as  parties  to  negotiable  instruments,  120. 

HOLDER.    Sec  Bona  Fide  Hoij)er. 

HOLIDAY. 

presentment  for  payment  when  instrument  falls  due  on,  .330. 

HONOR.    See  Acceptance  Supra  Pbotest;  Acceptob  Supba  Pbote.st; 
Payment  Supra  Protest. 

HOUR. 

at  what  hour  of  dav  presentment  for  payment  should  be  made,  322, 
323. 

IDIOTS.    See  Insane  Persons. 

ILLEGAL  CONSIDERATIONS, 
examples  of,  101-104. 
by  what  law  legality  of  consideration  determined,  105,  lOG. 

ILLNESS. 

of  holder,  as  excuse  for  nonprcsentment,  etc.,  395. 

IMBECILES.    See  Insane  Persons. 

IMMATERIAL  ALTERATION.     See  Alteration. 
illustrations  of,  437. 
effect  of,  437,  442. 

IMMEDIATE  P.\RTIES. 
who  are,  110. 
defenses  admissible  between,  110,  113,  445-447,  473. 

IMPLIED  ACCEPTANCE. 

what  will  amount  to,  299. 

IMPLIED  AUTHORITY, 
of  agents,  124,  125. 
of  one  partner  to  bind  firm,  134-137. 
of  corporations,  143,  144. 

IMPLIED  NOTICE.     See  Notice. 

INCAPACITY'.     See  Alien   Enemies;    Drunken  Persons;    Infants; 
Insane  Persons  ;  Married  Women. 
defense  of,  444. 
defense  of,  good  against  bona  fide  holder.  219,  444. 

INDEMNITY. 

receipt  of,  bv  maker  or  indorser  as  excuse  for  nonpresentment.  etc., 
396. 

26 


.^n  [References  are  to 

*"^  iiNDtx.  iHirugraphs  marked  §.} 

INDORSEMENT.     See  also  Indouser. 

Avhen  negotiable  instruments  transferable  by,  168. 
of  instrmnent  payable  to  bearer  or  indorsed  in  blank,  effect  of,  1G8. 
transfer  not  completed  without  delivery,  109. 
meaning  of  term,  170. 

is  a  separate  and  independent  contract,  171. 
linbilities  created  by,  172-178. 

liabilities  created  by  indorsement  without  recourse,  173. 
warranties  by,  172-178. 
place  of,  170. 

may  be  on  separate  paper,  180. 
allonge,  180. 

indorsement  in  full.  182. 
indorsement  in  blank,  183. 
absolute  and  conditional  indorsements,   184. 
restrictive  indorsements^  185. 
indorsements  without  recourse,  180. 
joint  indorsements,  187. 
successive  indorsements,  188. 
irregular  indorsements,  189-194. 
difference  between  guaranty  and,  190. 
who  may  sue  on  instrument  indorsed  in  blank,  398,  403. 
rights  of  holder  imder  blank  indorsement,  404. 
who  can  sue  on  instrument  indorsed  in  full,  405. 
filling  up  blank  indorsement,  404. 

where  indorsement  sjiecial  to  particular  person,  none  but  such  per- 
son or  his  representative  can  sue,  398. 
infant  may  transfer  title  by,  153. 
right  to  strike  out  indorsements,  404 

INDORSEMENT  IN  BLANK, 
defined,  183. 
effect  of,  183. 

INDORSEMENT  IN  FULL. 

defined,  182. 
effect  of,  182,  18.3. 

INDORSEMENT  WITHOUT  RECOURSE. 

effect  of,  180. 

liabilities  created  by,  173. 

INDORSER. 

contract  of,  172-178,  190,  311. 

warranties  by,   172-178,  424. 

joint  and  successive  indorsers,  187,  188. 

irregular  indorsers,   189-194. 

difference  between  liability  of,  and  guarantor,  196. 

when  suit  can  be  begun  against,  412,  413. 

action  against,  for  nonacceptance,  413. 

acceptance  no  admission  of  signature  of,  278,  425. 

is  surety  of  acceptor  or  maker,  475. 

new  promise  or  part  payment  by,  effect  on  statute  of  limitations, 

482. 
by  what  law  liability  of,  governed,  492. 

INDORSER  WITHOUT  RECOURSE, 
liability  assumed  by,  173. 

liability  of,  contrasted  with  liability  of  regular  indorser,  173. 
warranties  by,  173. 


ilUfn-cnciH  are  to  index.  403 

paiayrai»hs  marked  §.] 

INFANTS. 

who  arc,  150. 

contracts  of,  jjenorally  voidable,  l;jO. 

may  bind  tlieinselvcs  for  necessaries,   151. 

liable  for  torts,  151. 

cannot  bind  themselves  on  negotiable  instrument,   152. 

may  be  payee,  153. 

may  transfer  by   indorsement,   153,   154. 

ratification    by   adult   of    ne','otiable   instrument   executed   when    an 

infant,  155,  15G. 
what  will  amount  to  ratification,  155,  15G. 
may  act  as  agents,  121. 

where  drawee  is,  bill  may  be  treated  as  dishonored,  281. 
defense  of  infancy  good  against  bona  fide  holder,  21U,  444. 

INITIALS. 

sufficient  as  signature,  58. 

INLAND  BILLS  UF  EXCHANGE.     See  Bills  of  Exchange. 

INSANE  PERSONS. 

sanity  ])resumed,  157. 

insanity  must  be  specially  pleaded,  157. 

negotiable  contracts  of.  void,  157. 

what  deafrce  of  incapacity  suUiees  to  render  contract  void,  158. 

ignorance  of  incapacity,  effect  of.  159. 

contracts  of,  for  necessaries,  valid,  ItiO. 

ratification  after  recovery,  1(52. 

where  drawee  insane,  bill  may  be  treated  as  dishonored,  281. 

insanity  revokes  agency,  130. 

insanity  good  defense  against  iona  fide  holder,  219,  444. 

INSANITY.    Sec  Insane  Persons. 

INSOLVENCY  LAWS.    See  Bankruptcy  and  Insolvency  Laws. 

INSTALMENTS. 

instruments  payable  in,  when  deemed  overdue,  243. 
presentment  for  ])ayment  when  instrument   payable  in,  321. 
maker  entitled  to  gVace  on  each  instalment,  327. 
action  lies  for  each  instalment  as  it  falls  due,  413. 

INTENT. 

to  defraud,  essential  to  constitute  forgery,  421. 

INTERDICTION  OF  COiDIERCE. 

as  excuse  for  nonpresentment,  etc.,  384. 

INTEREST. 

whether  paper  deemed  overdue  when  instalment  of,  remains  unpaid, 

243. 
note  payable  on  demand  with,  is  continuing  security,  324. 
whether  separate  action  may  be  maintained  for.  401. 
may  be  recovered  without  barring  action  for  principal,  401. 
change  in  rate  of.  constitutes  material  alteration.  431. 

INTERPRETATION, 
meaning  of,  486. 
governed  by  Icr  loci  contractus,  48G. 

INTOXICATION.    See  Drunken  Persons. 


4-04-  TNnFV  [References  are  to 

^^^  xiNUi-A.  pantijraphs  marked  %.\ 

IREEGULAR  INDORSEMENTS. 

examples  of,  189-191. 

liability  of  one  not  payee  writing  his  name  on  paper  before  delivery 
to  payee,  191. 

conflict  of  decisions  as  to,  192. 

parol  evidence  of  intention  admissible  between  immediate  parties, 
193. 

whether  parol  evidence  of  intention  admissible  between  remote  par- 
ties, 194. 

JOINT  DRAWEES. 

if  not  partners,  all  must  accept,  284. 

if  drawn  on  firm,  may  be  accepted  by  one  partner  in  firm  name,  284. 

JOINT  PARTIES, 
suits  by,  399. 

new  promise  by  one,  effect  of,  on  statute  of  limitations,  481. 
several  payees  not  partners  must  indorse  jointly,  187. 
acceptance  by,  284. 

effect  of  indorsement  by  one  of  several  payees,  187. 
presentment  for  payment  to,  319. 
notice  of  dishonor  to,  369. 

JUDICIAI-  NOTICE. 

of  seal  of  notary  public,  348. 

of  days  of  grace  allowed  by  law  merchant,  328. 

when  taken  of  banking  hours,  322. 

courts  will  not  take,  of  laws  of  another  State  or  country,  484,  499. 

JUDICIAL  SALE. 

purchase  at,  not  in  usual  course  of  business,  238. 

JULIAN  CALENDAR,  331. 

JURY. 

what  are  business  hours  is  question  for,  322. 

LACHES. 

in  presentment  for  acceptance,  effect  of,  28,  39,  268. 

LADING,  BILLS  OF.    See  Bills  of  Lading. 

LAW  MERCHANT. 

principles  of,  when  applied  by  Federal  courts,  8,  499, 

LEGAL  HOLIDAYS. 

presentment  for  payment  when  instrument  falls  due  on,  330. 

LEGAL  TENDER. 

instrument  must  be  payable  in,  87,  88. 
what  constitutes  a,  464. 

LEGAL  TITLE. 

must  be  vested  in  plaintiff  to  entitle  him  to  sue  in  own  name,  448. 

LEX  DOMICILII.     See  Conflict  of  Laws. 

LEX  FORI.     See  Conflict  of  Laws. 

LEX  LOCI  CONTRACTUS.    See  Conflict  of  Laws. 


[Rffnenrrs  are  f'j  isuKX.  405 

paratjruphii  marked  §.] 

LEX  LOCI  REl  SIT.E.     »S'ce  Conflict  or  Laws. 
LEX  IX)CI  SOLUTIONLS.    See  Conflict  of  Laws. 
LIMITATION  OK  ACTIONS.     Hee  Statute  of  Li.\iitatio.ns. 
LIMITATIONS,  STATUTE  OF.     Hee  Statute  of  Li.mitatio.ns. 
LUNATICS.    See  Insane  Persons. 


MAIL. 

presentment  for  payment  by,  .340. 

customary  demand  by  banks  by  notice  through,  343,  344. 

wlien  notice  of  dislionor  may  bo  given  by.  373,  375-377. 

MAKER. 

obligation  of,  311. 

presentment  for  payment  not  necessarj'  to  bind,  311,  320. 
not  entitled  to  notice  of  dishonor,  358,  307. 
death  of,  presentment  for  payment  in  case  of,  318. 
e8top|)ed  to  denj'  capacity  of  pavee,  153,  100. 

warrants  genuineness  of  signatures  on  paper  wlien  put   in  circula- 
tion, 424. 
by  what  law  liability  of,  governed,  492. 

MAJ^  FIDES. 

negligence  as  evidence  of,  228,  229. 

MARK. 

as  a  signature,  58. 

MARRIAGE. 

of  feme  sole,  presentment  for  paj-ment  in  case  of,  315. 

MARRIED  WOMAN'S  ACTS, 
reference  to,  107,  400. 

MARRIED  WOMEN. 

incapacity  of,  to  contract  at  common  law,  105. 

as  payee  and  indorscr,  100. 

exceptions  to  rule  of  incapacity  to  contract,  107. 

statutory  changes  as  to  contractual  powers  of,  107,  400. 

may  act  as  agent,  121. 

presentment  for  payment  in  case  of  marriage  of  feme  sole,  315. 

husband  must  join  in  suit  on  bill  or  note  given  to  feme  sole  who 

afterward  marries,  400. 
on  death  of  husband,  right  of  action  survives  to  wife.  400. 
on  death  of  wife,  right  of  action  goes  to  her  personal  representative, 

400. 
where  bill  or  note  given  to  married  woman,  husband  may  join  wife 

or  sue  alone,  400. 
wife  cannot  sue  husband.  400. 

coverture,  defen^^e  of,  good  against  botta  fide  holder,  219.  444. 
suits  on  negotiable  instruments  held  by,  400. 
where  drawee  is  a,  bill  raay  be  treated  as  dishonored.  281. 

MATI'RTTY.    See  Overdue  Paper. 

MEDIUM  OF  PAYMENT,  80-89,  457. 


[Refcrc7iccfi  are  to 
40G  INDEX.  paragraphs  Marked  §.1 

3inLITARY  DISTURBANCES. 

as  excuse  for  nonpresentment,  etc.,  384. 

MINORS.    See  Infants. 

MISDESCRIPTION. 

in  notice  of  dishonor,  362. 

MISREPRESENTATION.     See  also  Fraud. 

■where  instrument  executed  under,  rights  of  bona  fide  holder,  210, 

220. 
effect  of,  on  surety's  liability,  477. 

MISTAKE. 

wliere  instrument  executed  under,  rights  of  bona  fide  holder,  210. 
of  fact  and  law,  payments  made  under,  452. 

MONEY. 

negotiable  instrument  must  be  payable  in,  8G-89. 
payment  must  be  made  in.  457. 
nothing  but  money  constitutes  lawful  tender,  4G4. 
recovery  of,  wlien  paid  on  forged  instrument,  424-426. 

MONTH. 

■what  constitutes,  at  common  law  and  under  law  merchant,  329. 
computation  of  months,  329. 

TklORTGAGE. 

lex  rei  sitw  governs  instrument  secured  by,  on  real  estate,  491. 

MUNICIPAL  BONDS. 

can  only  be  issued  for  public  purpose,  22. 
what  are  public  purposes,  23. 

MUNICIPAL  CORPORATIONS. 

definition  and  examples  of,  142. 

power  of,  to  execute  negotiable  instruments,  147. 

power  of,  to  issue  bonds,  22,  23. 

NECESSARIES. 

contracts  of  infants,  insane  persons,  and  married  women  for,   151, 
160,  167. 

NEGLIGENCE. 

effect  of.  on  bona  fides,  228,  229. 
line  of  demarcation  between,  and  notice,  232. 

leaving  room   for  alteration,  by  negligent  execution,  renders  party 
liable  to  bona  fide  holder,  439. 

NEGOTIABILITY, 
meaning  of,  1. 
words  of,  63. 
addition  or  change  in  words  of,  is  material  alteration,  436. 

NEGOTIABLE  INSTRUMENTS.  See  Bills  of  Exchange;  Promis- 
sory Notes  ;  Coupon  Bonds  ;  Municipal  Bonds  ;  Bank  Bills  ob 
Notes;  Certificates  of  Dkposit;  Checks;  Bills  of  Credit; 
Certificates  of  Stock  :  Bills  of  Lading  ;  Warehouse  Receipts. 

peculiarities  ofj  1. 

words  of  negotiability,  63. 


[Rrferrnces  are  to  ,     ,  ,  ytn** 

j)uni(jiai)hs  marked  §.]  INDEX.  40 < 

NEGOTIABLE  INSTRUMENTS  —  coutinued. 
diircn-nt  kinds  of,  15-55. 

bills  of  exchantre,  15,   17. 

promissory  notes,  l(i,  17. 

ooiii)on  bonds,  18-21. 

nnuii(i[)al  bonds,  22,  23. 

bank  notes,  24,  25. 

eertificatts  of  deposit,  20,  27. 

cheeks,  28-41. 

bills  of  credit;  42,  4.1. 
qimsi-nejrotiable  instniinents,  44-55. 

certificates  of  stock,  45-40. 

bills  of  lading,  50-52. 

warehouse  or  dock  leceipts,  53-55. 
essential  requisites  of  — 

must  be  o|)en  —  t.  e.,  un.sealed,  73,  74. 

enpajjement  to  pay  must  be  certain,  75,  70. 

fact  of  payment  imist  be  certain.  77-81. 

amount   to   be   ])aid   must   be  certain.   82-85. 

medium  of  ])ayment  must  be  money,  86-89. 
formal  requisites  of  — 

no  particular  form  required,  57. 

signature,  58. 

material  on  wliich  written,  58. 

Mhole  instrument  nmst  be  in  writing,  59. 

date,  02. 

words  of  negotiability,  03. 

stamps,  07,  (iS. 

delivery,  00-71. 
parol  evidence  generally  inadmissil)le  to  vary.  00. 
when  parol  evidence  admissible,  (!1,  02. 
contemporaneous  written  agreements,  when  admissible,  01. 

NEW  PROMISE. 

by  joint  maker,  surety,  indorser,  etc.,  effect  of,  on  bar  of  statute 
of  limitations,  481,  482. 

NONACCEPTANCE. 

action  upon  dishonor  for,  413. 

NOTARY  PUBLIC.     -S'ee  also  Protest. 

may  make  presentment  for  payment.  312. 

generally  protest  should  be  made  by,  348. 

seal  of,  courts  take  judicial  notice  of.  .348. 

seal  of,  prima  facie  proof  of  authenticitv  of  certificate  of  protest. 
348. 

must  have  personal  knowledge  of  presentment  and  demand  of  pay- 
ment in  order  to  make  certificate  of  |)rotest,  350. 

not  part  of  oilicial  duty  to  give  notice  of  dishonor.  300. 

NOTICE. 

bo)ia  fide  holder  must  acquire  instrument  witliout.  24.5-255. 

but  one  taking  with  notice  from  bona  fide  holder  acquires  title  of  his 

traTisferrer,  201. 
of  dishonor  by  nonacceptance  or  nonpayment,  245. 
of  fraud,  defect  of  title,  illegality  of  consideration,  etc.,  240. 
time  of  acquiring,  247. 
of  accommodation  character  of  paper,  200,  248. 


[Rffcnnccs  arc  to 
■iO^  iNDi-A.  paragraphs  marked  §.] 

NOTICE  —  continued. 

of  diversion  of  accommodation  paper,  248. 

express,  250. 

constructive,  251,  252,  254. 

of  particular  fraud,  illegality,  etc.,  not  necessary,  253. 

when  price  paid  by  purchaser  conveys  notice  of  fraud,  231,  232. 

line  of  demarcation  between  negligence  and,  232. 

notice  to  agent,  255. 

of  dissolution  of  partnership,  when  necessary,  140. 

NOTICE  OF  DISHONOR. 

necessity  of,  to  parties  secondarily  liable,  358. 

primarj'  debtor  not  entitled  to,  358. 

applies"  onlv  to  negotiable  instruments,  358. 

effect  of  failure  to  give,  311,  358,  359. 

may  be  verbal   or  written,   360. 

knowledge  of  dishonor  does  not  constitute,  360. 

form  and  contents  of,  361-364. 

by  whom  given,  365,  366. 

when  notice  by  one  inures  to  benefit  of  another,  365. 

notice  by  agent,  366. 

when  holder  dead,  366. 

to  whom  should  be  given,  367-371. 

drawer  and  indorsers  entitled  to,  but  maker  and  acceptor  not,  358, 

367. 
notice  to  agent,  368.  372. 
notice  to  partners  and  joint  indorsers,  369. 
notice  to  indorsers  for  collection  and  to  accommodation  and  fixed 

indorsers,  370. 
notice  when  drawer  or  indorser  is  dead  or  bankrupt,  371. 
how  served  — 

when  parties  in  same  place,  372. 

what  is  meant  by  same  place,  373. 

exceptions  to  rule  that  service  must  be  personal  where  parties 

live  in  same  place,  374. 
when  parties  reside  in  different  places,  375-377. 
drawer  or  indorser  may  direct  to  what  place  notice  shall  be 

sent,  376. 
where  party  lives  in  one  place  and  has  place  of  business  in  an- 
other, 376. 
where  party  resides  temporarily  in  certain  place,  376. 
time  within  which  given  — 

may  be  given  immediately  on  dishonor,  378. 

holder  has  until  expiration  of  day  following  dishonor  in  which 

to  give.  378. 
when  parties  reside  in  different  places,  notice  must  be  sent  by 
first   mail   of  day   succeeding  dishonor,   unless   unreasonably 
early,  379. 
each  lioldcr  has  a  day  within  which  to  give,  to  his  predecessor, 

380. 
transmission  of  notice  over  seas,  381. 

excuses   for   failure   to   give.     See   Excuses   for   Nonpresent- 
MENT,  Protest,  and  Notice. 
what  law  governs,  500. 

NOTING  DISHONOR,  351. 

NOVATION. 

effect  of,  471. 


[R(fnrncr/t  are  to  index.  409 

puruyruijhfi  marked  §.] 

OBLIGATION. 

of  contract  determircd  by  lex  loci  contractus,  486. 
meaning  of,  487. 

OCCUPATION  OF  COUNTRY  BY  ENEMY, 
as  excuse  for  nonpresentraent,  etc.,  384. 

OVERDUE  PAPER. 

transferee  of,  takes  subject  to  what  equities,  201-20.5,  474. 

vlien  instruments  payable  on  si^'ht  or  denian.l  deemed  overdue,  240. 

accommodation  i)aiier  ac(]uired  overdue,  205,  242. 

rule  where  iiistalmenl  nf  principal  or  interest  overdue,  243. 

wliether  deemed  overdue  when  transferred  on  last  day  of  grace,  244. 

OVERWHELMING  CALAMITY. 

as  e.\cuse  for  nonpresentment,  etc.,  385. 

P\ROL  EVIDENCE.     See  also  Evidence. 

generally  inadmissible  to  vary  or  contradict  written  instrument,  CO. 
when  admissible,  9,  01,  62.  ,       ■    ,  x 

admissibility  of,  to  show  intention  in  cases  of  irregular  indorsement, 

193,  194.  ■ 
when  admissible  to  supply  omissions  in  certificate  of  protest,  3ot. 

PARTICULAR  FUND. 

instrument  not  negotiable  when  payable  out  of,  81. 

PARTIES  TO  NEGOTIABLE  INSTRUMENTS, 
executors  and  administrators,  117-119. 
guardians,   120. 
trustees,  120. 
agents,  121-133. 
partners.  134-141. 
corporations,  1 12-149. 
infants,  150-1.56. 

lunatics,   imbecile*,  and  drunkards,   157-162. 
alien  enemies,  1G3,  104. 
married  women,  165-107. 
immediate  .nnd  remote,  who  are,  110.  111. 
defenses  admissible   between  immediate   parties,   110,   113,  445-44. , 

473. 
warranty  of  capacity  of.  153.  100,  ]i  i,  2<.i,  2(6. 
parties  to  bills  and  notes,  56. 
change  in  personality,  number,  or  relation  of,  constitutes  material 

alteration,  433. 

-|j  A  Tj  'y'^  T«^  T?  Q 

general  authority  of  one  partner  to  bind  firm,  134,  135. 

tradintr  jiartnerships,  negotiable  instruments  executed  by  one  part- 
ner bind  tirni.  136. 

one  nieml)er  of  nontrading  partnership^  cannot  execute  negotiable 
instrument  without  consent  of  all,  137_. 

exam])les  of  nontrading  partnerships.  137. 

accommodation  paper  executed  by  one  partner  not  binding  on  tirm. 

138 
where  one  partner  signs  firm  name  as  surety,  firm  not  bound.  138. 
firm  not  liable  on  paper  issued  in  linn  name  for  jtrivate  debt  of  one 

partner,  139. 


410  TisrnFx  [References  are  to 

^^"^^-  iHiruyrayhs  marked  §.1 

PARTNERS  —  coniimied. 

dissolution  of  partnership,  how  caused,  and  effect  of,  140,  141, 

when  notice  of  dissolution  necessary,  140. 

presentment  for  acceptance  to,  259. 

acceptance  by,  284. 

presentment  for  payment  by  and  to,  315,  319. 

notice  of  dishonor  to,  300. 

payment  by,  apjiropriation  of,  400. 

satisfaction  by  one  discharges  all,  4G7. 

suits  by,  399. 

PARTNERSHIP.    See  Partners. 

PART  PA^iTENT. 

ordinarily  only  payment  ■pro  ianio,  408. 
when  operates  as  satisfaction,  408. 
by  drawee  does  not  amount  to  acceptance,  298. 
after  maturity,  as  waiver  of  nonpresentment  and  notice,  389. 
by  joint  maker,   indorscr,  etc.,  effect  of,  on  statute  of  limitations, 
481,  482. 

PAYEE. 

capacity  of,  to  indorse  admitted  by  acceptance,  153,  166,  276. 
signature  of,  acceptance  no  admission  of,  278,  475. 
infants  and  married  women  as,  153,  166. 

PAYISIENT. 

defined,  449. 

distinguished  from   sale,  449. 

fact  of,  must  be  certain,  77-81. 

time  of,  need  not  be  definitely  ascertained,  if  sure  to  come,  78. 

who  may  make,  450. 

payor  should  see  that  holder's  title  is  genuine,  451. 

payments  under  forged  indorsement  and  under  mistake  of  fact  and 

law,  451,  452. 
payor  should  demand  surrender  of  instrument,  and  take  receipt,  453. 
to  whom  ])ayment  may  be  made,  454. 
when  payment  mav  be  made,  455,  456. 
medium  "of,  80-89.^449,  457. 
by  check,  note,  etc.,  457. 

acceptance  of  depreciated  currency  by  creditor  absolute,  458. 
appropriation  of  payments,  459,  460. 
payments  by  partners  and  joint  debtors,  460. 
change   in   time,  nlace,   or  medium  of,   is  material  alteration,  429, 

430,  432. 
part  payment.    See  Part  Payment. 
payment  supra  protest.    Bee  Payment  Supra  Protest. 

PAYMENT  SUPRA  PROTEST, 
when  mav  be  made,  461. 
effect  of/461. 

applies  only  to  bills  of  exchange,  461. 
payor  subrogated  to  rights  of  party  for  whose  honor  payment  made, 

461,  402. 
mode  of  making,  403. 
payor  should  notify  party  for  whose  honor  payment  made,  463. 

PENCIL. 

signature  in^  58. 


[References  are  to  j^.^^^^.  411 

parayru/jfiis  marked  i.J 

PERFORMAN'CE. 

law  of  place  of,  governs  \vhen,  490. 

PERSONAL  DEFENSES. 
dfliiH'd.  225. 
admissible  between  whom,  225. 

PERSONAL  REPRESENTATIVES.    See  Executors  a.nd  Admi.mstra- 

TOBS. 

PLAINTIFFS. 

to  actions  ou  negotiable  instruments,  398-40G. 

who  are  proper  parties  plaintitf  determined  by  lex  fori,  494. 

must  have  legal  title  in  order  to  sue  in  own  name,  448. 

PLEADING. 

plea  of  tender,  profort  of  money  must  accompany,  4G4. 
statute  of  limitations  must  be  specially  pleaded:  414. 

PLEDGE. 

of  negotiable  instruments,  234-2.3C. 

POLITICAL  DISTURBANCES. 

as  excuse  for  nonpresentment,  etc.,  385. 

POSSESSION. 

presumptions  from,  259. 

when  sullicient  evidence  of  right  to  present  for  payment,  312-314. 

prima  facie  evidence  of  ownership.  403.  40G. 

not  always  necessary  in  order  to  institute  suit,  406. 

POST-OFFICE.     See  Mail. 

PRE-EXISTING  DEBTS. 

as  a  consideration  for  negotiable  instruments,   100,  234,   235. 

PRESENTMENT. 

excuses  for  want  of.    Sec  Excuses  for  Nonpresentment,  Protest, 
AND  Notice. 

PRESENTMENT  FOR  ACCEPTANCE. 

acceptance  apjilies  only  to  bills  of  exchange,  256. 

what  bills  do  and  do  not  rc(]uire  presentment  for  acceptance,  257. 

when  drawer  bound  without  presentment,  258. 

by  whom  made,  259. 

to  wliom  made,  259-201. 

where  drawees  joint,  259. 

where  drawees  j)artners.  259. 

presentment  to  agent  of  drawee,  260. 

where  drawee  dead,  201. 
place  of.  202-2()4. 
how  made.  2(i5.  266. 
time  of,  267-269. 

duty  of  collecting  banks  as  to.  132. 
what  law  governs,  500. 

PRESENTMENT  FOR  PAYMENT. 

not  necessary  to  bind  accei)tor  or  maker.  311.  320. 
drawer  and   indorsers  discharged  unless   duly  made   and   notice   of 
dishonor  given,  311,  320. 


412  INDEX. 


lRefere7ices  are  to 
paragraphs  marked  §.] 


PRESENTMENT  FOR  PA YIMENT  — coH/nn<crf. 
by  whom  made  — 

may  be  made  by  any  bona  fide  holder  or  his  agent,  312. 

when   mere  possession   sufficient   evidence  of   right  to   present,. 
312-314. 

if  holder  is  dead,  representative  must  make,  315. 

if  holder  is  bankrupt,  assignee  must  make,  315. 

if  partner  die,  survivor  must  make,  315. 

if  feme  sole  marry,  husband  must  make,  315. 
to  whom  made  — 

may  be  made  to  acceptor  or  maker  or  their  agents,  316. 

personal  demand  not  necessary,  316. 

sufficient  if  made  to  any  person  found  on  premises,  316,  317. 

where  no  one  to  answer,  presentment  at  dwelling  sufficient,  317. 

when  maker  or  acceptor  dead,  should  be  presented  to  personal 
representative,  318. 

if  no  representative,  should  be  made  at  dwelling  of  deceased, 
or  at  place  where  payable,  318. 

where  several  promisors  not  partners,  should  be  made  to  each, 
319. 

presentment   to   one   partner   sufficient,   even   after   dissolution, 
319. 

on   death   of   copromisor   or   partner,   should   be   made   to   sur- 
vivor, 319. 
time  of  — 

should  be  on  day  of  maturity,   320. 

if  before  maturity,  nugatory,  320. 

if  after  maturity,  without  effect,  unless  excused,  320. 

when  payable  on  demand,  321.  324,  325. 

when  pavable  in  instalments,  321. 

at  what  "hour  of  day,  322,  323. 

when  entitled  to  grace,  326-328,  332. 

when  day  of  maturity  falls  on  Sunday  or  holiday,  330. 

computation  of  time^  329-331. 
mode  of  — 

instrument  should  be   actually  exhibited,   339. 

presentment  by  mail,  340. 

leaving   instrument   in   debtor's  hands,  341. 

when   payable  at  bank,   342. 

customary  demand  by  notice  through  the  mails,   343,   344. 
place  of  — 

Avhen  payable  generally.   333. 

when  place  of  payment  specified,  333. 

when  at   place  of  business  and  when  at  residence.   334,   335. 

when  presentment  made  in  person,  place  unimportant,  336. 

whether  due  diligence  to  find  maker  at  place  where  instrument 
dated  is  sufficient,  337. 

when  payable  at  either  of  several  places,  338. 
by  holder  of  check,  laches  in,  28,  39. 
of  checks,  time  of,  30. 
duty  of  collecting  banks  as  to,   132. 
what  law  governs,  500. 

PRESUMPTIONS. 

as  to  consideration,  1.  90.  91.  445. 

as  to  legality  of  consideration,  446. 

as  to  fact  and  place  of  delivery,  70,  488. 


VHrrerem-es  arr  10  ,vi.i.v  ±^1 

imruijniphii  marked  §.]  i-\L>tA.  tio 

PRESUMPTIOXS  —  continued. 
as  to     sanity,   157. 

that  one  producing  inntrunient  is  bona  fide  holdor,  199. 
that  instruineiit  iu(|iiiifcl  bt-fore  maturity,  241. 
arisinp  from  possession,   l!t!t,  259. 
as  to   liatc  of  ai'ceptiUK'e,  288. 
in  favor  of  protest,  'i'tl. 

when  dumicile  of  maker  or  acceptor  presumed  to  be  place  of  execu- 
tion, 48'J. 
as  to  foreign  laws  and  as  to  law  merchant,  499. 

PRIXCIPAL.     See  also  Agent. 

undisclosed,  not  liable  on  negotiable  instrument,  127. 
ratification  by,  of  acts  of  agent,  121). 

whether  can  .sue  on  instrument  given  to  "A.  B.,  agent  for  C  D.,"  402. 
change  in  amount  of,  constitutes  material  alteration,  431. 

PRINCIPAL  AND  SURETY.     See  Surety. 

PRIVT   PARTIES, 
who  are,  110. 
defenses  admissible  between,   110,   113,  444-447,  473. 

PROCURATION. 

authority  by,  123. 

PROFERT. 

of  money  must  accompany  plea  of  tender,  464. 

PROMISE. 

to  pay,  as  waiver  of  nonpresentment,  etc.,  389. 

PROMISES  TO  ACCEPT,  303-305. 

PROMISSORY  NOTES.     See  also  Negotiable  Instruments. 
defined,  16. 

origin  and  history  of,  2,  4. 
whether  negotiable  at  common  law,  4. 

declared  negotiable  by  statute  3  and  4  Anne,  chap.  9,  4. 
parties  to,   16,  50. 

diflference  between,  and  bills  of  exchange,  17. 
certainty  of  promise  in,  76. 
protest  of.  under  statute,  347. 
foreign,  whether  protest  essential  on  dishonor  of.  347. 

PROOF,  BURDEN  OF.     See  Burden  of  Proof. 

PROTEST. 

meaning  of,  345. 

must  be  made  for  nonacceptance  and  nonpajTnent,  346. 

what  instruments  must  or  may  be  protested,  6.  347. 

certificate  of.  exclusive  evidence  of  dishonor  of  foreigm  bills.  347. 

by  whom  made,  348. 

how  authenticated,  348. 

place  of,  .340. 

notarj'  must  have  personal  knowledge  of  presentment  and  demand  of 

|)ayment ,   3.50. 
time  within   which  certificate  of,   must  be  prepared.  351. 
skeleton  or  initial  protest,  351. 


.-.i  ,  [References  are  to 

'*-'^*  INDEX.  paragraphs  marked  §.J 

PROTEST  —  co)itmucd. 

what  certiticate  of,  must  contain,  352-354. 
certificate  of,  as  evidence,  355-357. 
what  hiw  governs,  500. 

excuses  for  want  of.     ^ee  Excuses  for  Nonpbesentment,  Protest, 
AND  Notice. 

PUBLIC  ENEMY. 

occupation  of  country  by,  as  excuse  for  nonpresentment,  etc.;,  384. 

PUBLIC  POLICY. 

examples  of  considerations  opposed  to,   103. 

PUBLIC  PURPOSE. 

municipal  bonds  can  only  be  issued  for^  22. 
what  are  public  purposes,  23. 

PURCHASER,   BONA   FIDE.     *S'ee   Bona    Fide   Holder. 

QUALIFIED  ACCEPTANCE,  262,  309. 

QUASI-NEGOTIABLE   INSTRUMENTS. 

possess  some  but  not  all  qualities  of  negotiable  instruments,  44. 
different  kinds  of,  44-55. 

certificates  of  stock,  45-49. 

bills  of  ladings  50-52. 

warehouse  or  dock  receipts,  53-55. 

RATIFICATION. 

by  principal  of  unavithorized  acts  of  agent,  129. 
of  contracts  made  while  an  infant,  155,  156. 
of  contracts  made  while  insane  or  drunkj  162. 
of  forged  signature,  422. 

REAL  DEFENSES, 
defined,  225. 
admissible  against  iona  fide  holder,  225. 

REAL  ESTATE. 

governed  by  law  of  place  where  situated,  491. 

REASONABLE  TIME. 

instruments  payable  on  sight  or  demand  must  be  presented  in,  2G8. 
what  is,  269. 

RECEIPT. 

payor  should  take,  453. 

RECEIVERS. 

do  not  acquire  instruments  in  usual  course  of  business,  238. 

RECOI'RSE,    INDORSEMENT    WITHOUT.     See   Indorsement    With- 
out Recourse. 

RECOURSE,    INDORSER    WITHOUT.      See    Indorser    Without    Re- 
course. 

RECOVERY. 

of  money  paid  on  forged  inptrnmcnt.  278.  280.  424-426. 
amount  of,  when  less  than  full   value  paid.  216,  217. 


[References  are  lO  index.  415 

paragraphs  marked  §.] 

RELEASE. 

elFcct  of,  4GU. 

REMEDY. 

f^oviTiiod  by  kx  fori,  484,  493. 

REMOTE  PARTIES, 
who  are.  111. 

REMOVAL. 

of  maker  or  acceptor,  as  excuse  for  nonprescntnient,  etc.,  397. 

RENEWAL  NOTES,  114,  115. 

RESIDENCE. 

presentment  for  acceptance  at,  204. 

presentment  for  payment  at,   31(),   323,  334,  335. 

presentment  may  be  made  to  i)erson  found  at,  317. 

presentment  at,' suflicient    when   maker   or   acceptor   dead,   and    no 

personal  representative  appointed,  318. 
notice  of  dishonor  to,  372,  370,  378. 

RESTRICTIVE  INDORSEMENT. 

defined,  185. 

examples  of,  1.S5. 

rights  of  indorsee  under,  185. 

REVOCATION, 
of  agency,  130. 

SALE. 

payment  distinguished  from,  449. 

SANITY. 

presumption  of,  157. 

SATISFACTION.     See  Accord  and  Sati.sfaction  ;  Payment. 

SEAL. 

effect  of,  on  negotiability,  21,  73,   (4. 

what  is  sealed  instrument,  73. 

imports  a  consideration,  90. 

doctrine  tliat  corporations  can  only  bind  themselves  by  contracts 

under,  obsolete,  21. 
adding  or  detaching,  constitutes  material  alteration,  434. 

SECURITY.     Sec  Collateral  Security. 

SERVICES. 

as  a  consideration,  99. 

SET-OFF. 

defined,  472. 

unknown  at  common  law,  472._ 

to  what  actions  applicable.   472. 

may  be  pleaded  only  between  immediate  partie9._^473. 

not  an  equity  attaching  to  overdue  paper.  204,  474. 

governed  by  lex  fori,  498. 

SETS. 

of  foreign  bills  of  exchange,  G4-GG. 


.  ^  _  ,       .  [References  are  to 

41"  INDEX.  paragraphs  marked  §.] 

SICKNESS. 

as  excuse  for  nonpresentment,  etc.,  269,  385,  395. 

SIGHT. 

when  instruments  payable  on.  deemed  overdue,  240. 
bills  payable  at,  do  not  require  presentment  for  acceptance,  257. 
time  of  presentment  for  payment  where  bill  payable  at  or  after,  268. 
"  on  demand  at  sij^ht  "  equivalent  to  "  at  sight,"  321,  327. 
whether  instruments  payable  at,  entitled  to  grace,  327. 
meaning  of  "  after  sight."  327. 

when  statute  of  limitations  begins  to  run  on  instrument  payable 
at,  415. 

SIGNATURE, 
place  of  J  58. 
how  made,  58. 
what  will  suffice  for,  58. 
by  agents,  126. 

of   drawer  admitted  by  acceptance,  273,  424. 
of  payee  or  indorser,  acceptance  no  admission  of,  278,  425. 

SPECIAL  INDORSEE. 

where  indorsement  special,  none  but  indorsee  or  his  representative 
can  sue,  398. 

STALE  CHECKS. 
status  of,  39. 

STAMPS. 

upon  negotiable  instruments,  67,  68. 

STATES. 

of  Union,  foreign  to  each  other,  7,  483. 

prohibited  from  emitting  bills  of  credit,  42. 

power  of,  to  enact  bankruptcy  and  insolvency  laws,  465. 

STATUTE  OF  LIMITATIONS, 
origin  of,  414. 

does  not  destroy  debt,  but  merely  bars  remedy,  414. 
must  be  specially  pleaded,  414. 
governed  by  lex  fori,  414,  495. 
begins  to  run  when,  28,  415. 

new  promise  or  part  payment  by  joint  maker,  joint  and  several 
maker,  indorser  or  surety,  effect  of,  481,  482. 

STOLEN  INSTRUMENTS. 

rights  of  bona  fide  holder  where  undelivered  instruments  stolen  and 

put  in  circulation,  207,  208,  223. 
thief  may  transfer  good  title  to  negotiable  instrument  when  payable 

to  bearer,  1. 

STOPPAGE  IN  TRANSITU. 

effect  of  transfer  of  bill  of  lading  on,  51. 

STRANGER. 

acceptance  by,  282. 

SUBROGATION. 

of  pavor  supra  protest  to  rights  of  party  for  whose  honor  he  pays, 
46 1",  462. 


[References  are  to  ^^^^^^  4I7 

parayruphu  marked  §.] 

SUBSTITUTION. 

of  another  obligation,  effect  of,  471. 

SUITS.    Stf  Actions. 

SUNDAY. 

presentment  for  payment  when  instrument  falls  due  on,  3.30. 

SUPRA  FllOTEST.     Hee  Acceptance  Supra  Protest;  Acceptor  Supra 
Protest;   Payment  Supra  Protest. 

SURETY. 

contract  of,   105. 

difference  between  liability  of,  and  of  guarantor,  195. 

not  entitled  to  notice  of  dishonor,  307. 

drawer   (after  acceptance)   and  indorsers  are  sureties  to  acceptor  or 

maker,  475. 
not  cosureties,  and  not  entitled  to  contribution,  475. 
each  prior  party  is  a  principal  as  between  himself  and  each  sub- 
sequent party,  475. 
what  will   discharge  — 

whatever  dixharges  principal  debtor  will  discharge  surety,  470. 
misrepresentation,    duress,    diversion,    alteration,    tender,    etc., 

477. 
parting  with  security,  etc.^  478. 
extension  of  time,  479,  480. 

new  promise  or  part  payment  by,  effect  of,  on  bar  of  statute  of  limi- 
tations, 481,  482. 

TELEORAPH. 

acceptance  by,  297. 

TENDER. 

what  is  a  sufficient,  464. 

effect  of,  4G4,  477. 

plea  of,  must  be  made  with  profert  of  money.  404. 

THIEF. 

may  transfer  good  title  to  negotiable   instrument  v/hen  payable  to 
bearer,  1. 

TIME. 

computation  of,  329-.331. 

extension  of.  effect  of,  on  surety's  liability,  470,  480. 

TITLE. 

thief   may   transfer   good,   to   negotiable    instrument    if   payable    to 

bearer,  1. 
legal,  any  holder  with,  may  sue.  308. 

legal,  mu.st  be  vested  in  plaintiff  to  entitle  him  to  sue  in  own  name, 
448. 

TRADING  PARTNERSHIPS. 

negotiable  instrument  executed  by  one  partner  binding  on  firm.  13fi. 

TRANSFER.     ,SVc  Delivery  :  Indorsement. 

TRAVELING. 

when  party  is,  as  excuse  f^r  nonpresontnient,  etc.,  303. 

TRUSTEES. 

as  parties  to  negotiable  instruments,  120. 


4 -(  Q  [References  are  to 

*^*  INDEX.  paragraphs  marked  §.] 

USAGE. 

as  to  proper  hour  for  presentment  for  acceptance,  267,  268. 
of  banks,  as  to  days  of  grace,  may  alter  law  merchant,  328. 

USUAL  COURSE  OF  BUSINESS.     See  Business. 

USURY,  104. 

UTTERING. 

meaning  of,  421. 

essential  to  constitute  forgery,  421. 

VALIDITY. 

governed  by  lex  loci  contractus,  486. 

VALUABLE   CONSIDERATION.     See   Consideration. 

VERBAL. 

acceptances,  300. 
notices  of  dishonor,  360. 

VOID. 

where  instrument  declared  void  by  law,  good  defense  against  bona 

fide  holder,  221. 
when  instrument  known  by  drawer  or  indorser  to  be,   nonpresent- 
ment,  etc.,  excused,  391. 

WAGERS,  102. 

WAIVER. 

of  presentment,  protest,  and  notice,  388,  389. 

WAR. 

effect  of,  on  intercourse,  163. 

does  not  revoke  agency,  130. 

as  excuse  for  nonpresentment,  etc.,  384. 

WAR  BETWEEN  THE  STATES, 
cases  growing  out  of,  80. 
citizens  of  United  States  and  Confederate  States  alien  enemies,  164. 

WAREHOUSE  RECEIPTS. 

description  and  nature  of,  53,  .54. 
difference  between,  and  bills  of  lading,  53. 
statutory  enactments  in  regard  to,  55. 

WARRANTIES. 

by  indorsement.  172-178,  424. 
by  acceptance,   273-277,  424. 
by  acceptance  for  honor,  295. 

WITHOUT  RECOURSE.     See  Indorsement  Without  Recourse;    In- 
dorser Without  Recourse. 

WITNESS. 

adding  name  of,  is  material  alteration,  when,  434. 


[Whole  Number  of  Pages  452.] 


LAW  LFBRARY 

UNIVERSITY  OF  CALIFORNIA 

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